Commercial Metals (CMC) Buys Tendon Systems to Boost Portfolio

·3 min read

Commercial Metals Company CMC announced that it acquired Tendon Systems, LLC, a provider of post-tensioning, barrier cable and concrete restoration solutions.

Based in the Southeastern United States, Tendon generated a revenue of about $60 million in 2022. A broad range of construction types, including multifamily housing, parking garages, industrial buildings, and high-rise structures, uses Tendon's products and services.

Tendon’s main product is post-tension cable, which is typically used in conjunction with rebar in applications. This provides Commercial Metals with significant commercial synergy prospects. The acquisition will boost Commercial Metals’ position in construction reinforcement and provide additional capabilities to serve customers.

The financial terms of the acquisition have not yet been disclosed.

Commercial Metals has been gaining from its acquisitions. As part of its strategic initiatives to boost growth, CMC has been active on the acquisition front.

In March 2023, the company announced the acquisition of Roane Metals Group LLC, a Tennessee-based metal recycling company. The acquisition is expected to boost Commercial Metals’ steelmaking operations' security and supply of competitively priced inputs.

In November 2022, Commercial Metals completed the acquisition of a Galveston area metals recycling facility and related assets from Kodiak Resources, Inc. and Kodiak Properties, L.L.C. Similar to Roane, the buyout was expected to enhance the security and supply of competitively priced inputs to the company’s steelmaking operations.

In September 2022, the company acquired Advanced Steel Recovery, LLC a leading supplier of recycled ferrous metals in Southern California. The acquisition supports the company's strategic expansion plans in the Western United States.

In April 2022, the company acquired Tensar Corporation, which added a highly-attractive growth platform to the company. It is expected to make Commercial Metals a unique provider of value-added reinforcement solutions for the domestic and international construction markets.

After the first quarter of fiscal 2023 (ended Nov 30, 2022), Commercial Metals’ total liquidity was $1.5 billion. The company’s strong liquidity, financial position and focus on reducing debt by strategic capital allocation approach will open additional acquisition opportunities.

Price Performance

Commercial Metals’ shares have gained 9.2% in the past year against the industry’s fall of 9.1%.


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Zacks Rank & Stocks to Consider

Commercial Metals currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space are CalMaine Foods, Inc. CALM, Reliance Steel & Aluminum Co. RS and Alpha Metallurgical Resources AMR. CALM and RS currently flaunt a Zacks Rank #1 (Strong Buy), and AMR carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CalMaine Foods’ fiscal 2023 earnings per share is pegged at $16.75, suggesting 515.8% growth from the year-ago reported figure. Earnings estimates have moved 106.8% north in the past 60 days. CALM has a trailing four-quarter earnings surprise of 15.3%, on average. Its shares have gained 9.6% in the past year.

The Zacks Consensus Estimate for Reliance Steel’s earnings per share is pegged at $20.86 for 2023. Earnings estimates have been revised 16.1% upward in the past 60 days. RS has a trailing four-quarter average surprise of 13.4%, on average. The company has gained 26.7% in a year.

The Zacks Consensus Estimate for Alpha Metallurgical’s 2023 earnings per share is pegged at $46.09. Earnings estimates have moved 56.5% north in the past 60 days. AMR’s shares have gained 14.1% in the past year.

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