Commercial Metals Company

Stock: CMC

Rating: Hold

Author: Waleed M. Tariq

The Corporation

  • CMC is a North American and European steel and metal products producer, recycler, and fabricator with vertical integration.
  • Downstream products, steel products, and raw materials are the three categories of its products.


  • There is a consistent and drastic increase demand for steel.
  • The company has had a strong performance over the last few quarters, boosted by rising steel prices.
  • Despite increased profits, the company has room for development.


  • Steel prices have historically plummeted during economic crises and have started plummeting under recession fears.
  • If a recession occurs and steel prices drop, CMC stock will suffer.


  • The company’s MRQ net sales increased 36% year-over-year due to higher prices.
  • Gross margin grew to 22.2%. Net margin rose from 7% to 12.4% and operating margin from 9.8% to 16.7%. Normalized net margin doubles from 5.7% to 10%.

Bull Case

  • S&P Global predicts a 0.4% increase in steel demand in 2022 to 1.84 billion MT and a 2.2% increase in 2023 to 1.88 billion MT.

Bear Case

  • Recession might lower steel prices to 2008 levels. During a recession, steel supplies might be disrupted and backlogs can vanish.


  • The company’s valuation indices are above rivals’ and below 5-year norms.
Seeking Alpha
  • Its price is 4.84x profits and 0.55x sales, 66% and 58% lower than industry medians of 13.91x and 1.31x.


  • Under normal conditions, Commercial Metals Company stock would be a wonderful investment. Given the steel industry’s systemic concerns, the risks outweigh the rewards. Only risk-takers should buy these stocks now.