Commercial Metals (CMC) Up 7.3% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Commercial Metals (CMC) reported a decline in earnings and sales in its most recent earnings report, missing estimates, but the stock has shown a positive trend in the month following the report, outperforming the S&P 500 [1][2][3]. Financial Performance - Adjusted earnings per share (EPS) for Q3 fiscal 2025 were 74 cents, missing the Zacks Consensus Estimate of 85 cents, and down 27.5% year over year [3]. - Net sales for the quarter were $2.02 billion, slightly above the Zacks Consensus Estimate of $2.01 billion, but down from $2.08 billion in the previous year [3]. - Cost of goods sold decreased by 1% year over year to $1.72 billion, while gross profit fell 11.9% to $300 million [4]. - Core EBITDA was reported at $204 million, down 20.3% year over year [4]. Segment Performance - The North America Steel Group generated net sales of $1.56 billion, down from $1.67 billion year over year, with adjusted EBITDA of approximately $186 million compared to $246 million in the prior year [5]. - The Europe Steel Group's revenues increased by 18.6% year over year to $247.6 million, with adjusted EBITDA improving to $3.6 million from a negative $4.2 million [6]. - The Emerging Businesses Group reported net sales of $197 million, up from $188.5 million year over year, with adjusted EBITDA increasing by 7.9% [7]. Cash Flow and Balance Sheet - Cash and cash equivalents at the end of Q3 fiscal 2025 were $893 million, up from $858 million at the end of fiscal 2024 [8]. - Long-term debt increased to $1.30 billion from $1.15 billion at the end of fiscal 2024 [8]. - Cash generated from operating activities for the nine months ended May 31, 2025, was approximately $400 million, down from $548 million in the prior year [8]. Dividend and Outlook - A quarterly dividend of 18 cents per share was declared, payable on July 9 to shareholders of record as of June 30, 2025 [9]. - The company expects consolidated financial results in Q4 fiscal 2025 to improve from Q3 levels, with anticipated increases in adjusted EBITDA margins for the North America Steel Group and the Europe Steel Group [10][11]. Estimate Trends - Fresh estimates for the company have trended upward over the past month, with a consensus estimate shift of 17.21% [12]. - The stock has an average Growth Score of C and a value grade of B, resulting in an aggregate VGM Score of B [13]. - The company holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [14].