Commercial Metals Co

CMC

Steel Works, Blast Furnaces & Rolling Mills (Coke Ovens)

Mkt Cap

$6.455B

PE

9.49

Debt

$1.162B

Cash

$639.9M

EV

$6.977B

FCF

$657M

Market Cap

$6.455B

P/E Ratio

9.49

Debt

$1.162B

Cash

$639.9M

EV

$6.977B

FCF

$657M

Charts data: {"Earnings":[{"time":"2014-08-30","value":115551000},{"time":"2015-08-30","value":141634000},{"time":"2016-08-30","value":54762000},{"time":"2017-08-30","value":46332000},{"time":"2018-08-30","value":138506000},{"time":"2019-08-30","value":198093000},{"time":"2020-08-30","value":279503000},{"time":"2021-08-30","value":412865000},{"time":"2022-08-30","value":1217262000},{"time":"2023-08-30","value":859760000}],"Sales":[{"time":"2014-08-30","value":7039959000},{"time":"2015-08-30","value":5988605000},{"time":"2016-08-30","value":4610526000},{"time":"2017-08-30","value":4569675000},{"time":"2018-08-30","value":4643723000},{"time":"2019-08-30","value":5829002000},{"time":"2020-08-30","value":5476486000},{"time":"2021-08-30","value":6729760000},{"time":"2022-08-30","value":8913481000},{"time":"2023-08-30","value":8799533000}],"Net Margins":[{"time":"2014-08-30","value":0.01641358990869123},{"time":"2015-08-30","value":0.023650583065672224},{"time":"2016-08-30","value":0.011877603553260518},{"time":"2017-08-30","value":0.010139014262502256},{"time":"2018-08-30","value":0.029826499125809185},{"time":"2019-08-30","value":0.03398403363045681},{"time":"2020-08-30","value":0.05103692404216865},{"time":"2021-08-30","value":0.06134914172273603},{"time":"2022-08-30","value":0.1365641549019962},{"time":"2023-08-30","value":0.0977051850365241}],"Assets":[{"time":"2014-08-30","value":3688520000},{"time":"2015-08-30","value":3372302000},{"time":"2016-08-30","value":3130869000},{"time":"2017-08-30","value":2975131000},{"time":"2018-08-30","value":3328304000},{"time":"2019-08-30","value":3758771000},{"time":"2020-08-30","value":4081728000},{"time":"2021-08-30","value":4638671000},{"time":"2022-08-30","value":6237027000},{"time":"2023-08-30","value":6639094000}],"Stockholders Equity":[{"time":"2014-08-30","value":1348591000},{"time":"2015-08-30","value":1319350000},{"time":"2016-08-30","value":1367431000},{"time":"2017-08-30","value":1400930000},{"time":"2018-08-30","value":1493583000},{"time":"2019-08-30","value":1624057000},{"time":"2020-08-30","value":1889413000},{"time":"2021-08-30","value":2295109000},{"time":"2022-08-30","value":3286429000},{"time":"2023-08-30","value":4121114000}],"ROE":[{"time":"2014-08-30","value":0.08568276074806966},{"time":"2015-08-30","value":0.10735134725432978},{"time":"2016-08-30","value":0.04004735887953396},{"time":"2017-08-30","value":0.03307231624706445},{"time":"2018-08-30","value":0.09273404959751148},{"time":"2019-08-30","value":0.12197416716285205},{"time":"2020-08-30","value":0.14793112993294744},{"time":"2021-08-30","value":0.17988905973528926},{"time":"2022-08-30","value":0.37039047549787324},{"time":"2023-08-30","value":0.20862320236712695}],"ROA":[{"time":"2014-08-30","value":0.060336395085291664},{"time":"2015-08-30","value":0.0955691394187116},{"time":"2016-08-30","value":0.047086288183887604},{"time":"2017-08-30","value":0.02993179123877234},{"time":"2018-08-30","value":0.06199583932236959},{"time":"2019-08-30","value":0.09041066880637315},{"time":"2020-08-30","value":0.10598819911566866},{"time":"2021-08-30","value":0.11512306003163406},{"time":"2022-08-30","value":0.24292776029348598},{"time":"2023-08-30","value":0.16899399225255735}]}

Commercial Metals Company manufactures, recycles, and fabricates steel and metal products, and related materials and services in the United States, Poland, China, and internationally. The company processes and sells ferrous and nonferrous scrap metals to steel mills and foundries, aluminum sheet and ingot manufacturers, brass and bronze ingot makers, copper refineries and mills, secondary lead smelters, specialty steel mills, high temperature alloy manufacturers, and other consumers. It also manufactures and sells finished long steel products, including reinforcing bar, merchant bar, light structural, and other special sections, as well as semi-finished billets for rerolling and forging applications. In addition, the company provides fabricated steel products used to reinforce concrete primarily in the construction of commercial and non-commercial buildings, hospitals, convention centers, industrial plants, power plants, highways, bridges, arenas, stadiums, and dams; sells and rents construction-related products and equipment to concrete installers and other businesses; and manufactures and sells strength bars for the truck trailer industry, special bar steels for the energy market, and armor plates for military vehicles. Further, it manufactures rebars, merchant bars, and wire rods; and sells fabricated rebars, wire meshes, fabricated meshes, assembled rebar cages, and other fabricated rebar by-products to fabricators, manufacturers, distributors, and construction companies. The company was founded in 1915 and is headquartered in Irving, Texas.

Sector

10-K
8/31/23
10-Q
5/31/23
10-Q
2/28/23
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11/30/22
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10-Q
11/30/18
10-K
8/31/18
10-Q
5/31/18
10-Q
2/28/18

DCF

Discounted Cash Flow Valuation of Commercial Metals Co

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$657M	$698.2M	$740.9M	$785.2M	$831.1M	$878.5M	$927.3M	$977.6M	$1.029B	$1.082B	$1.136B	$11.36B
DCF		$607.1M	$560.2M	$516.3M	$475.2M	$436.8M	$400.9M	$367.5M	$336.5M	$307.6M	$280.9M	$2.809B
Value	$7.098B

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth 44%

Earnings Stability 83%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is too low to guarantee profitability in case of higher costs or higher interest rates. Furthermore lower margins cause higher earnings’ volatility.

Over time the ROA has been increasing indicating a higher marginal ROA with respect to the calculated one, giving a good sign for continued growth.

Years	08-2016	08-2017	08-2018	08-2019	08-2020	08-2021	01-2022	08-2022	08-2023	TTM
Net Margin	1.2%	1%	3%	3.4%	5.1%	6.1%	-	14%	9.8%	8.1%
ROA	4.7%	3%	6.2%	9%	11%	12%	-	24%	17%	13%
ROE	4%	3.3%	9.3%	12%	15%	18%	-	37%	21%	16%

What is the average Net Margin?

The average Net Margin over the past 5 years is +7.61%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is +1.72%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +14.47%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is +2.42%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +20.58%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is +3.27%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

Under the assumption that FCF does not diminish and debt does not increase, the current years to repay the debt are acceptable.

The Graham’s stability indicate a relevant drawdown, consider checking when it has occured and why.

Years	08-2016	08-2017	08-2018	08-2019	08-2020	08-2021	01-2022	08-2022	08-2023	TTM
Debt FCF	2.53	-21.34	-72.51	-12.18	1.80	24.38	-	7.37	1.57	1.77
Debt Equity	0.78	0.59	0.78	0.76	0.57	0.47	-	0.56	0.28	0.28
MIN
Graham Stability	-	45%	100%	100%	100%	100%	-	100%	100%	45%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 1.77.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is 1.91.

What is the Graham’s Stability?

Graham’s Stability measure stands at 0.45.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has not been increasing in the past years.

Years	08-2017	08-2019	08-2021	08-2022	Trend
Revenue	9.8%	8.6%	9.4%	-1.3%	2.7%
Net Income	52%	34%	28%	-29%	-0.39%
Stockholders Equity	17%	20%	22%	25%	3.2%
FCF	-	-	160%	190%	-25%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +8.59%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is +2.74%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is +34.12%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is -0.39%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is +20.47%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is +3.25%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is -.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is -25.4%.