Why Commercial Metals Company (NYSE:CMC) Could Be Your Next Investment
As an investor, I look for investments which do not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Commercial Metals Company (NYSE:CMC), it is a financially-sound company with a strong history of performance, trading at a discount. Below, I've touched on some key aspects you should know on a high level. For those interested in understanding where the figures come from and want to see the analysis, read the full report on Commercial Metals here.
Undervalued with proven track record and pays a dividend
Over the past few years, CMC has more than doubled its earnings, with its most recent figure exceeding its annual average over the past five years. Not only did CMC outperformed its past performance, its growth also surpassed the Metals and Mining industry expansion, which generated a 27% earnings growth. This paints a buoyant picture for the company. CMC is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is a crucial insight into the health of the company. Debt funding requires timely payments on interest to lenders. CMC’s earnings sufficiently covered its interest in the prior year, which indicates there’s low risk associated with the company not being able to meet these key expenses.
CMC's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of CMC's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of its peers with similar levels of earnings, CMC's share price is trading below the group's average. This further reaffirms that CMC is potentially undervalued.
Next Steps:
For Commercial Metals, there are three relevant factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for CMC’s future growth? Take a look at our free research report of analyst consensus for CMC’s outlook.
Dividend Income vs Capital Gains: Does CMC return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from CMC as an investment.
Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of CMC? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
