On Friday, BMO Capital Markets adjusted their outlook on Commercial Metals Company (NYSE:CMC) shares, reducing the price target from $62.00 to $58.00. Despite the change in the price target, the firm maintained a Market Perform rating on the stock. Currently trading at $48.45, CMC shows a strong financial health score according to InvestingPro analysis, with the stock trading near its 52-week low of $47.42.
BMO Capital provided insights ahead of Commercial Metals Company's anticipated earnings report for the first quarter of fiscal year 2025, which is expected to be released on January 6. The firm projected a sequential decline in core EBITDA from its current $912.47 million level, attributing this to margin compression in North America, which could be slightly mitigated by a carbon credit received in Europe. InvestingPro data reveals that three analysts have recently revised their earnings expectations downward for the upcoming period.
The analysis further indicated that for the second quarter of fiscal year 2025, results might see a further decline. This is attributed to seasonally lower volumes, continued margin compression in North America, and persisting softness in the European market. Despite this, BMO Capital anticipates that the second quarter earnings will mark a near-term trough, with expectations for an improvement in earnings in the second half of the year.
The firm's revised forecasts, which include lower margin assumptions, led to the reduction in the target price for Commercial Metals Company shares to $58. This adjustment reflects BMO Capital's analysis of the company's near-term financial prospects in light of current market conditions and expected industry trends.
In other recent news, Commercial Metals Company (CMC) announced a regular quarterly cash dividend of $0.18 per share, marking its 241st consecutive quarterly dividend. The company also reported a core EBITDA of $1 billion for fiscal 2024, a decrease from $1.4 billion in fiscal 2023, but returned $261.8 million to shareholders, a 48% increase from the previous fiscal year. CMC has extended the maturity of its $600 million revolving credit facility from 2027 to 2029, ensuring continued financial flexibility.
In the realm of analyst ratings, KeyBanc Capital Markets retained a Sector Weight rating, Morgan Stanley (NYSE:MS) maintained an Equalweight rating, and BMO Capital kept a Market Perform rating on CMC shares. These ratings were maintained despite recent adjustments to earnings estimates and the anticipation of CMC's first-quarter earnings report for 2025.
In terms of project developments, CMC's Arizona 2 micro mill is projected to reach operational breakeven in Q1 2025, and the Steel West Virginia project is set for commissioning in late 2025.
Despite a projected decline in consolidated financial results for Q1 2025 due to temporary softness in the construction industry, CMC anticipates improved market conditions in the second half of fiscal 2025. The company plans to continue investing in its future with a projected capital expenditure of $630-$680 million for fiscal 2025. These are the recent developments in the company.
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