On Thursday, Commercial Metals Company (NYSE:CMC) maintained a Neutral rating with a steady price target of $60.00, as confirmed by a Citi analyst. The firm's recent financial results for the third fiscal quarter showed a core EBITDA of $256 million, aligning with the Bloomberg consensus but surpassing Citi's own prediction of $238 million.
The analyst pointed out that the performance exceeded their expectations mainly due to lower scrap costs at U.S. mills. However, shipment volumes were noted to have dropped by 3% year-over-year, despite the operational ramp-up of the new Arizona mill.
Commercial Metals Company has provided guidance suggesting a stable core EBITDA for the fourth fiscal quarter, approximately $256 million, which is below the consensus estimate of $276 million and unchanged from Citi's forecast. The absence of previous expectations for the Arizona mill to reach EBITDA break-even by year-end from the press release was also highlighted. Nonetheless, the European operations have managed to break even, and the Emerging Business segment saw a rebound in EBITDA to $38 million.
Additionally, there were positive indicators of increased infrastructure activity. Capital expenditure spending has been notably lower than anticipated, with only around $240 million spent through the third quarter, compared to the full-year guidance of $550-600 million. Nevertheless, the planned West Virginia mill is reportedly on track for completion in late-2025.
The analyst expects the stock to perform in line with the market, following these developments. Commercial Metals Company is scheduled to discuss these details further during a conference call set for 11 AM Eastern Standard Time today.
In other recent news, Commercial Metals Company reported robust earnings for the second and third quarters of fiscal 2024. The company's core EBITDA of $256 million for Q3 slightly surpassed both BMO (TSX:BMO) Capital's and consensus estimates due to stronger shipments and pricing. The company's Q2 report also showed strong results, with net earnings of $85.8 million, improved liquidity, and leverage metrics.
Commercial Metals Company expects Q4 results to align with Q3, a forecast slightly below BMO Capital and market consensus estimates. The company's strategic projects, such as the Arizona 2 plant and Steel West Virginia site, are progressing as planned. Despite uncertainties in the West Coast rebar market, the company anticipates monthly EBITDA breakeven by the fourth fiscal quarter, supported by robust construction activity in North America.
BMO Capital maintained its Market Perform rating on Commercial Metals Company with a steady price target of $60.00. The company's commitment to shareholder returns was underscored by an increased quarterly dividend and an enhanced share repurchase authorization by $500 million.
InvestingPro Insights
As Commercial Metals Company (NYSE:CMC) navigates through market dynamics, recent data from InvestingPro offers a deeper look into the company's financial health and stock performance. With a market capitalization of $5.87 billion and a compelling price-to-earnings (P/E) ratio of 8.69, the company's valuation appears attractive, particularly when noting the adjusted P/E ratio for the last twelve months as of Q2 2024 is even slightly lower at 8.57. This aligns with the company's strong track record of shareholder returns, as evidenced by its consistent dividend growth over the past three years and a dividend yield of 1.42%. Additionally, the company's solid gross profit margin of 19.07% underscores its ability to maintain profitability in a competitive industry.
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