CM

Commercial Metals Co

CMC
—
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Commercial Metals Co AI Insights

Informational only. Not investment advice.
As of 2025-12-18

Snapshot

  • Net margin TTM 1.1% vs industry median 4.0% - steel margins compressed 73% below peers despite 2x revenue scale[Net Margin TTM]
  • FCF of 312M TTM (4% yield) with 403M capex - capital intensity consuming 52% of operating cash flow[Free Cash Flow TTM]
  • ROE 2.0% and ROIC 1.5% TTM vs industry median 10.6%/6.7% - returns well below cost of capital[ROE TTM]

Watch Triggers

  • Operating Margin TTM: Rises above 10% (vs current 6.7%) — Would signal pricing power recovery and validate margin normalization thesis
  • ROIC TTM: Falls below 1% or rises above 5% — Determines if capital allocation is value-creating or destroying
  • Inventory TTM: Drops below 800M from current 934M — Would release 130M+ working capital and signal demand recovery

Bull Case

Cash position of 1.04B (13% of market cap) with 0.32 debt/equity provides downside protection and M&A optionality in fragmented steel sector

Cash and Equivalents TTMDebt to Equity

P/E 21.3x at cycle trough earnings - normalized earnings power of 6-8 EPS would imply 8-12x P/E on mid-cycle

PE RatioEPS TTM

Bear Case

ROIC 1.5% TTM destroys shareholder value - 5.5B invested capital generating only 85M net income, 6x below industry median returns

ROIC TTMInvested Capital TTM

Capex of 403M TTM exceeds depreciation by 5.6x - heavy reinvestment without commensurate return improvement signals structural capital intensity

Capital Expenditure TTMReconciled Depreciation

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

BearBull
35%

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Forward Thesis

Margin recovery to industry median would triple net income from 85M to 300M+

1-3ylow
  • Steel price stabilization post-destocking
  • Operating leverage on fixed cost base
  • Inventory drawdown releasing working capital
Net margin 1.1% vs 4.0% median - 290bps gapInventory 934M with 43M reduction in progressOperating income 520M on 7.8B revenue base
Valuation Context
Caveats

Public Strategies Rankings

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Fundamental company data provided by Morningstar, updated daily.

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