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What's in Store for Commercial Metals' (CMC) Q4 Earnings?

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Commercial Metals Company CMC is scheduled to report fourth-quarter fiscal 2020 (ended as of Aug 31, 2020) results on Oct 15, before the opening bell.

Which Way are the Estimates Headed?

The Zacks Consensus Estimate for fiscal fourth-quarter revenues is pinned at $1,384 million, suggesting a decline of 10.3% from the prior-year period. The Zacks Consensus Estimate for earnings per share is pegged at 60 cents for the quarter, indicating a year-over-year fall of 21%.

Q3 Performance

In the last reported quarter, the company’s top and bottom lines beat the respective Zacks Consensus Estimates but declined year over year. The company has a trailing four-quarter average earnings surprise of 38.9%.

Commercial Metals Company Price and EPS Surprise

Commercial Metals Company Price and EPS Surprise
Commercial Metals Company Price and EPS Surprise

Commercial Metals Company price-eps-surprise | Commercial Metals Company Quote

What Our Model Indicates?

Our proven model conclusively predicts an earnings beat for Commercial Metals this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Commercial Metals is +1.54%.

Zacks Rank: Commercial Metals currently carries a Zacks Rank of 3.

Key Factors

Commercial Metals is expected to have benefited from solid construction and infrastructure activity during the fiscal fourth quarter. Increased spending on construction activity in the United States has been strong on pre-funded long-term construction projects, fueling robust demand for rebar. Moreover, a solid fabrication backlog, strong bidding activity and an upbeat rebar-margin environment are likely to have benefited the company’s fiscal fourth-quarter performance.

However, U.S steel prices have been under pressure this year amid the pandemic. This might have dented the company’s margins during quarter under review.

Segment Projections

Commercial Metals recently announced that the company has realigned its reporting structure into two operating segments — North America and Europe — from the beginning of fourth-quarter fiscal 2020. North America includes the company's former Americas Recycling, Americas Mills and Americas Fabrication business segments. Europe comprises the company's former International Mill segment.

The Zacks Consensus Estimate for the Americas Recycling segment’s revenues is pegged at $235 million, suggesting a decline of 12.3% from the year-ago quarter. Ferrous tons shipped during the quarter to be reported are estimated at 515,000 tons, down 7.8% year over year. Average ferrous selling price is projected at $183 per ton, down 15.7% from the prior-year quarter, reflecting a challenging price environment. The Zacks Consensus Estimate for non-ferrous shipments is projected at 60,000 tons, down 1.6% from the year-ago quarter. Average non-ferrous selling price is estimated at $2,100 per ton, calling for year-over-year growth of 5.1%.

For the Americas Mills segment revenues, the Zacks Consensus Estimate is pinned at $743 million, indicating a year-on-year decline of 9.9%. Total tons shipped are estimated at 1,201 tons, down 1.2% from the prior-year quarter. Metal margin is projected at $358 per ton, down 10.3% from the year-ago period.

The Zacks Consensus Estimate for the Americas Fabrication segment revenues is pegged at $569 million for the to-be-reported quarter, indicating an 8.5% fall from the $622 million witnessed in fourth-quarter fiscal 2019. The segment is expected to have shipped around 435,000 tons, down 2.9% year over year. Total selling price is projected at $949 per short ton, down 1.5% year on year.

The Zacks Consensus Estimate for the International Mill segment’s revenues is currently pinned at $160 million for the fiscal fourth quarter, suggesting a decline of 22% from the prior-year quarter. Shipments are estimated at 350 tons, down 9.8% from the last year. Selling price is projected at $427, down 14.6% year over year. Average costs are projected at $233, down 12% from the year-earlier period. Metal margins are expected at $195 per ton, down 17% year on year. Metal margins have been under pressure due to elevated import levels.

Price Performance

Commercial Metals’ shares have gained 20.8% in the past year, outperforming the industry’s growth of 0.3%.

Stocks Worth a Look

Here are some stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

Winnebago Industries, Inc. WGO has an Earnings ESP of +17.2% and holds a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

UniFirst Corporation UNF has an Earnings ESP of +12.07% and currently carries a Zacks Rank of 2.

Duck Creek Technologies, Inc. DCT has an Earnings ESP of +25% and carries a Zacks Rank #3, currently.

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