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Investing.com - UBS maintained its Neutral rating on Commercial Metals Company (NYSE:CMC) with a $48.00 price target on Tuesday. According to InvestingPro data, CMC currently trades at $51.96, with a market capitalization of $5.8 billion and demonstrates good overall financial health.
The investment firm cited Commercial Metals’ belief that it will generate higher through-cycle margins and return on invested capital due to several factors, including a consolidated rebar market where Commercial Metals and Nucor (NYSE:NUE) control approximately 75% of the market. The company’s strong market position is supported by its solid financial foundation, with a healthy current ratio of 2.86 and moderate debt-to-equity ratio of 0.33.
UBS noted that Commercial Metals is implementing 150 operational improvement initiatives across melt shop and rolling mill yield, logistics, and alloys, which are expected to deliver benefits of $50 million in 2025 and approximately $100 million annually upon completion.
The company’s organic growth projects, including the Arizona 2 facility ramp-up (profitable in fiscal fourth quarter) and West Virginia project (first half of 2026), are progressing, with the West Virginia project expected to receive approximately $80 million in net benefits from 48C tax credits.
Commercial Metals is also pursuing inorganic growth opportunities in early-stage construction that align with megatrends, offer higher margins, require less capital intensity, and create synergies with the company’s core business, while maintaining leverage broadly below 2x, according to UBS. Notably, InvestingPro analysis reveals that CMC has maintained dividend payments for 55 consecutive years, demonstrating long-term financial stability. For deeper insights into CMC’s valuation and growth prospects, access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Commercial Metals Company (CMC) reported its third-quarter fiscal 2025 earnings, which fell short of analyst expectations. The company’s earnings per share (EPS) were $0.74, missing the anticipated $0.84, while revenue reached $2 billion, slightly under the forecasted $2.05 billion. Despite these challenges, CMC remains optimistic about improved financial results in the upcoming quarter, focusing on expanding proprietary products and enhancing operational efficiency. Additionally, the company appointed Dawne S. Hickton to its Board of Directors, expanding the board from nine to ten members. Hickton, who has extensive leadership experience, will serve on the Audit and Finance Committees. Furthermore, CMC is targeting higher steel product margins and expects inorganic growth transactions valued between $500 million and $750 million. The company also projects capital expenditures for fiscal 2026 at $550 million, with a potential $80 million tax credit for the West Virginia project. These developments reflect CMC’s strategic efforts to enhance its financial profile and pursue growth opportunities.
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