Commercial Metals (NYSE:CMC) Shares Gap Up Following Better-Than-Expected Earnings

Key Points

• Commercial Metals exceeded quarterly expectations: EPS came in at $2.09 versus the $1.95 consensus, while revenue reached $2.66 billion, up 25.7% year over year. Shares gapped from $65.29 to $69.38 following the report.
• The company declared a quarterly dividend of $0.20 per share, equivalent to a 1.2% yield, and authorized a $600 million share-repurchase program covering up to 7.5% of outstanding shares.
• Analysts maintain a generally positive outlook, with a “Moderate Buy” consensus and an average price target of $80.27; nine analysts rate the stock a Buy and six rate it a Hold.

Commercial Metals Company (NYSE:CMC - Get Free Report) gapped up before the market opened on Thursday after the company announced better than expected quarterly earnings. The stock had previously closed at $65.29, but opened at $69.38. Commercial Metals shares last traded at $65.6710, with a volume of 180,401 shares changing hands.

The basic materials company reported $2.09 EPS for the quarter, topping analysts' consensus estimates of $1.95 by $0.14. The company had revenue of $2.66 billion for the quarter, compared to the consensus estimate of $2.58 billion. Commercial Metals had a net margin of 6.72% and a return on equity of 15.69%. Commercial Metals's revenue was up 25.7% on a year-over-year basis. During the same period in the previous year, the firm earned $1.37 EPS.

Commercial Metals Dividend Announcement

The business also recently disclosed a quarterly dividend, which will be paid on Wednesday, November 11th. Investors of record on Wednesday, October 28th will be paid a dividend of $0.20 per share. This represents a $0.80 dividend on an annualized basis and a dividend yield of 1.2%. The ex-dividend date is Wednesday, October 28th. Commercial Metals's dividend payout ratio (DPR) is currently 15.07%.

Commercial Metals declared that its board has approved a share buyback plan on Wednesday, August 5th that authorizes the company to buy back $600.00 million in outstanding shares. This buyback authorization authorizes the basic materials company to purchase up to 7.5% of its shares through open market purchases. Stock buyback plans are usually a sign that the company's board believes its shares are undervalued.

Analyst Ratings Changes

CMC has been the subject of a number of research analyst reports. JPMorgan Chase & Co. cut their target price on Commercial Metals from $83.00 to $80.00 and set an "overweight" rating for the company in a research report on Friday, October 9th. BNP Paribas Exane upgraded Commercial Metals from a "neutral" rating to an "outperform" rating and set a $75.00 price target on the stock in a research report on Wednesday, July 8th. Citigroup dropped their price objective on Commercial Metals from $85.00 to $75.00 and set a "buy" rating on the stock in a research note on Tuesday, July 7th. Zacks Research raised Commercial Metals from a "strong sell" rating to a "hold" rating in a research note on Monday, July 13th. Finally, Barclays upped their price objective on Commercial Metals from $75.00 to $80.00 and gave the company an "equal weight" rating in a report on Friday, August 7th. Nine equities research analysts have rated the stock with a Buy rating and six have assigned a Hold rating to the company's stock. According to MarketBeat.com, the stock has an average rating of "Moderate Buy" and a consensus target price of $80.27.

Insider Activity

In other Commercial Metals news, Director John McPherson bought 1,390 shares of the company's stock in a transaction that occurred on Thursday, August 13th. The shares were acquired at an average cost of $71.92 per share, for a total transaction of $99,968.80. Following the acquisition, the director directly owned 21,927 shares of the company's stock, valued at $1,576,989.84. This trade represents a 6.77% increase in their ownership of the stock. The purchase was disclosed in a document filed with the SEC, which is available through this link. 0.62% of the stock is owned by corporate insiders.

Institutional Trading of Commercial Metals

Institutional investors and hedge funds have recently added to or reduced their stakes in the business. GAMMA Investing LLC lifted its stake in Commercial Metals by 23.1% in the 3rd quarter. GAMMA Investing LLC now owns 4,396 shares of the basic materials company's stock worth $273,000 after acquiring an additional 824 shares in the last quarter. Green Alpha Advisors LLC boosted its position in Commercial Metals by 14.0% during the 3rd quarter. Green Alpha Advisors LLC now owns 23,122 shares of the basic materials company's stock worth $1,436,000 after acquiring an additional 2,839 shares during the period. CoreCap Advisors LLC boosted its position in Commercial Metals by 24.0% during the 3rd quarter. CoreCap Advisors LLC now owns 1,448 shares of the basic materials company's stock worth $90,000 after acquiring an additional 280 shares during the period. Apella Capital LLC purchased a new position in Commercial Metals during the 3rd quarter valued at about $247,000. Finally, Congress Asset Management Co. grew its stake in Commercial Metals by 20.8% during the 3rd quarter. Congress Asset Management Co. now owns 90,211 shares of the basic materials company's stock valued at $5,602,000 after acquiring an additional 15,546 shares in the last quarter. 86.90% of the stock is owned by institutional investors and hedge funds.

Commercial Metals Trading Down 0.5%

The company has a market cap of $7.19 billion, a PE ratio of 12.24, a PEG ratio of 0.25 and a beta of 1.53. The company has a debt-to-equity ratio of 0.73, a quick ratio of 1.54 and a current ratio of 2.33. The company has a 50 day simple moving average of $67.17 and a two-hundred day simple moving average of $68.27.

Commercial Metals Company Profile

Commercial Metals Company NYSE: CMC is a steel and metals manufacturer, fabricator and recycler headquartered in Irving, Texas. Founded in 1915, the company operates a vertically integrated business that collects and processes ferrous scrap, produces steel and supplies products used in construction and infrastructure projects.

CMC's product portfolio includes reinforcing bar, merchant bar, wire rod, structural components and other steel products. Through its fabrication and construction services, the company also processes and prepares reinforcing steel for commercial, industrial, transportation and other building projects.

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