Should You Buy, Sell or Hold CMC Stock Before Q1 Earnings Release?

Commercial Metals Company CMC is scheduled to report first-quarter fiscal 2026 results on Jan. 8, before the opening bell. CMC is expected to deliver a year-over-year improvement in both revenues and earnings in the quarter.

The Zacks Consensus Estimate for CMC’s fiscal first-quarter revenues is pegged at $2 billion, indicating a 4.6% dip from the year-ago reported figure.

The consensus estimate for earnings is pegged at $1.55 per share. The Zacks Consensus Estimate for CMC’s fiscal first-quarter earnings has moved up 2.6% in the past 60 days. The estimate indicates a year-over-year rise of 98.7%.

CMC’s Earnings Surprise History

Commercial Metals’ earnings beat the Zacks Consensus Estimates in one of the trailing four quarters, came in line in one quarter and missed in the other two, the average surprise being a negative 6.3%.

Its peers like Nucor Corporation NUE and Cleveland-Cliffs Inc. CLF have average four-quarter earnings surprises of 31.4% and 2.5%, respectively.

What the Zacks Model Unveils for Commercial Metals

Our proven model does not conclusively predict an earnings beat for Commercial Metals this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here.

You can uncover the best stocks before they are reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for CMC is 0.00%.

Zacks Rank: Commercial Metals currently flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Likely to Have Shaped CMC’s Q1 Performance

The company is facing the impacts of a prolonged economic slowdown in the Western world, coupled with weaker-than-anticipated demand for steel. In Europe, sluggish demand has pressured pricing and margins in fiscal 2024. Throughout fiscal 2025, the conditions in Europe have improved, aided by better Polish demand, but are still fragile. The company expects Europe Steel Group’s adjusted EBITDA for the to-be-reported quarter to remain near breakeven.

Overall, financial results in the first quarter of fiscal 2026 are expected to be in line with the fiscal fourth-quarter results. Commercial Metals expects a sequential drop in the Emerging Businesses Group's results, reflecting typical seasonality, but anticipates an increase on a year-over-year basis.

The company expects finished steel shipments within the North America Steel Group to follow normal seasonal trends in the to-be-reported quarter. Higher steel product margins over scrap are expected to have pushed the segment’s adjusted EBITDA margin.

Commercial Metals has also been implementing price rises across its mill products in response to rapidly rising scrap costs, which will sustain margins.

Commercial Metals’ Price Performance & Valuation

CMC shares have gained 56.1% in the past year compared with the industry’s 54.5% growth. In comparison, the Zacks Basic Materials sector and the S&P 500 have returned 41.5% and 21%, respectively.

The Steel-producer has performed better than its peers like Nucor and Cleveland-Cliffs, which have increased 41.3% and 23.5%, respectively.

Commercial Metals is currently trading at a forward price/sales ratio of 0.96 compared with the industry's 1.59.

Peer Cleveland-Cliffs is a cheaper option, trading at a forward price/sales ratio of 0.29, while Nucor is trading at a higher 1.08, respectively.

Investment Thesis on CMC

Commercial Metals recently closed two major acquisitions — Concrete Pipe & Precast, LLC ("CP&P") and Foley Products Company. These deals 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-$30 million from Foley and CP&P by year three, with additional synergies expected to be recognized in upcoming years. Moreover, the company has a strong liquidity, financial position and focus on reducing debt through a strategic capital allocation approach, which will likely stoke growth.

Should You Buy Commercial Metals Stock Now?

CMC is expected to post strong fiscal first-quarter results, surpassing estimates, mainly driven by improving Europe conditions and demand in North America. With an appealing valuation and upward earnings estimate revisions, now appears to be a favorable time to consider adding the stock to your portfolio.

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

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