CMC Stock Nears 52-Week High on Strong Earnings Beat
The steel producer's record North American margins and robust construction demand drove a 19% first-quarter earnings surprise, signaling a strong outlook.
Shares of Commercial Metals Company (NYSE: CMC) surged in trading Tuesday, approaching a 52-week high after the company posted first-quarter financial results that significantly outpaced Wall Street expectations. The performance was powered by record-setting results in its core North American steel operations and historic strength in its construction solutions division.
The Irving, Texas-based steel and recycling giant reported an adjusted first-quarter EPS of $1.84, delivering a 19.3% beat over the consensus analyst estimate of $1.54. Revenue for the quarter landed at $2.12 billion, comfortably exceeding the projected $2.06 billion. The positive results sent the company's stock climbing towards its 52-week high of $74.95, reflecting strong investor confidence.
The robust earnings were underpinned by exceptional performance across its key segments. According to the company's earnings release, the North America Steel Group saw its adjusted EBITDA grow by nearly 58% year-over-year, with metal margins reaching a three-year peak. This suggests powerful pricing power and efficient cost management. At the same time, the Construction Solutions Group achieved its most profitable first quarter in company history, indicating sustained, strong demand from building and infrastructure projects.
"Our outstanding first-quarter results demonstrate the success of our strategic growth initiatives and the persistent strength in our key end markets," said Barbara Smith, Chairman of the Board and CEO, in a statement. "Our team's execution, combined with robust demand for our foundational construction products, allowed us to capitalize on favorable market conditions and deliver exceptional value to our shareholders."
Despite the strong quarter, Commercial Metals offered a cautious but stable outlook, guiding for a modest, seasonal decline in its second-quarter EBITDA. However, the company is positioning for significant future growth. Management highlighted the strategic importance of recent acquisitions, which are projected to contribute an additional $165 million to $175 million in annual EBITDA by fiscal 2026, bolstering its long-term earnings power.
The performance of CMC stands out at a time of continued focus on infrastructure investment. As a key producer of rebar and other essential steel products for construction, the company is a direct beneficiary of public and private sector projects. Its results are often viewed as a barometer for the health of the non-residential construction market, which has remained a resilient pocket of the economy.
Investors have responded favorably to the blend of strong current performance and a clear strategy for future growth. With a market capitalization of approximately $8.28 billion and a majority of analysts rating the stock as a 'Buy' or 'Strong Buy', the first-quarter beat reinforces the bullish case for the steel manufacturer.