Commercial Metals Boosts Portfolio With Acquisition of CP&P

Commercial Metals Company CMC recently declared that it has closed its previously announced deal to acquire Concrete Pipe & Precast, LLC ("CP&P") from Eagle Corporation and ECPP, LLC. The addition of CP&P will expand CMC’s early-stage construction solutions portfolio.

Details of Commercial Metals’ CP&P Buyout Deal

CP&P is a provider of precast concrete solutions that serves the Mid-Atlantic and South Atlantic regions of the United States and is wholly owned by Eagle Corporation and ECPP. It has strong, stable margins and cash flows and is part of a large and attractive industry.

CMC acquired CP&P for a cash purchase price of $675 million.

The acquisition of CP&P creates a scalable platform for CMC in a fragmented industry with strong profit margins. The market conditions for the precast suppliers provide Commercial Metals a long-term runway for self-directed organic and inorganic growth.

The deal is projected to be immediately accretive to CMC’s earnings per share and free cash flow. By the third year of completion, annual run-rate synergies from the transaction are expected to be between $5 million and $10 million, primarily related to optimization initiatives.

The CP&P deal will advance CMC's core business by adding a complementary revenue stream with higher and more stable margins. The precast business requires less capital than the company’s traditional steel operations. This will result in stronger cash flow generation.

CMC’s Focus on Portfolio Optimization

Commercial Metals inked a deal to acquire Foley Products Company for a cash purchase price of $1.84 billion. This deal will provide CMC with an immediate platform scale in a strategically attractive industry.

The company expects to close this deal by the end of 2025. The acquisition of Foley and CP&P will position Commercial Metals as a leading player in the Mid-Atlantic and Southeastern regions, which will operate one of the largest precast concrete platforms in the United States.

CMC has identified operational annual run-rate synergies of $25 million to $30 million from Foley and CP&P by year three, with additional synergies expected to be recognized in upcoming years.

Commercial Metals Stock’s Price Performance

The company’s shares have gained 2.7% in the past year compared with the industry’s 18.5% growth.

CMC’s Zacks Rank & Stocks to Consider

CMC currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the basic materials space are OR Royalties Inc. OR, Newmont Corporation NEM and First Majestic Silver Corp. AG. While OR and NEM sport a Zacks Rank #1 (Strong Buy) each at present, AG carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for OR Royalties’ 2025 earnings is pegged at 82 cents per share. The estimate indicates year-over-year growth of 57.7%. OR Royalties’ shares have surged 83.7% in a year.

The consensus estimate for Newmont’s 2025 earnings is pegged at $5.96 per share. The estimate indicates year-over-year growth of 71.3%. It has an average trailing four-quarter earnings surprise of 41.6%. Newmont’s shares have soared 125.5% in a year.

The Zacks Consensus Estimate for First Majestic Silver’s 2025 earnings is pegged at 25 cents per share, indicating a year-over-year upsurge of 278%. First Majestic Silver’s shares skyrocketed 157.1% last year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research