Commercial Metals Company topped earnings estimates and matched revenue expectations Thursday. CMC stock gained Thursday.
With its Q4 report, Commercial Metals Company kicks off earnings season for steelmakers as others in the industry have recently given mixed signals about what to expect from upcoming reports amid falling steel prices and uncertainty around China's economy.
CMC Stock: Earnings
Estimates: Analysts forecast earnings growing 76% to $2.22 per share in Q4. Wall Street expected revenue to increase 20% to $2.4 billion.
Results: Commercial Metals Company earnings ballooned 94% to $2.45 per share in Q4. Sales jumped the anticipated 20% to $2.4 billion.
CEO Barbara Smith said in a statement that CMC was able to "fully capitalize on very strong market conditions in North America and to navigate the volatile conditions in Europe."
"The flexibility of our operations in Poland, and its low-cost operating structure relative to peers, positions CMC well to manage the challenging economic environment in Europe," Smith said.
Full-2022 earnings skyrocketed 190% to $10.09 per share, beating Wall Street estimates. Revenue increased 33% to $8.9 billion, meeting views.
Outlook: Smith added that CMC anticipates a "strong financial performance" in Q1 2023 based on "robust demand in North America." The company said market conditions in Europe are less certain "given the ongoing energy crisis and slowing industrial activity."
Smith said that entering fiscal year 2023, the company's North America contract backlog volume and its average pricing are both at "historically high levels."
CMC stock jumped 6% to 42.02 during Thursday's market trading. On Wednesday, shares dropped 1.4% to 39.60. The stock is consolidating below a buy point of 44.45, according to MarketSmith. With the market in correction, investors should exercise extreme caution. CMC has climbed more than 30% above its 52-week low set in July. Shares have also jumped 14% since it hit a recent low of 35.22 on Sept. 30.
The Irving, Texas-based company engages in the manufacturing, recycling, and marketing of steel and metal products. It is a leading supplier of rebar — steel reinforcing bar — in both North America and Europe. Founded in 1915, its facilities include eight electric arc furnace mini mills.
CMC topped third quarter earnings views on June 16. Earnings ballooned 150% to $2.61 per share. Sales increased 39% to $2.5 billion.
On Tuesday, CMC announced it was increasing its quarterly dividend 14% to 16 cents per share, up 2 cents from the previous 14-cent dividend. CMC stock yields 1.6%.
Commercial Metals Company ranks first in the Metal Processing & Fabrication industry group. CMC stock has a 98 Composite Rating out of 99. It has a 92 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement that tops at 99. The EPS Rating is 99.
Steel Market
Last month, Nucor, the leading electric arc furnace steelmaker, warned that profit will lag estimates in Q3. Meanwhile, Steel Dynamics increased its third-quarter earnings estimates to above Wall Street expectations.
Steel Dynamics reports Q3 earnings on Oct. 19 and Nucor is expected to announce its quarterly financials on Oct. 20.
Steel Dynamics earnings are expected to increase 3% to $5.12 per share. Revenue is predicted to edge up 8% to $5.5 billion.
In recent months, steel industry executives, coming off strong quarterly performances, have been bullish on both product demand and the industry outlook. However, at least some assessments from analysts see the market as oversupplied, suggesting very little pricing strength.
The Covid-19 pandemic mangled global supply chains in many industries, including steel. As much of the world slogged through the crisis, demand for steel crashed before picking up toward the end of 2020.
In 2021, U.S. steel prices skyrocketed to all-time highs, moving above $1,900 per ton in August 2021. Prices fell into a lull early in 2022, and then surged to around $1,500 per ton of hot-rolled coil (HRC) in April after Russia invaded Ukraine. Prior to the pandemic, HRC prices ran near $500 per ton.
Prices have begun to come back to earth once again. HRC futures were around $712 per ton Thursday. Meanwhile steel rebar futures traded down around $530 per ton Thursday, approaching lows.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
