Is CMC's North America Steel Group Segment Set for Long-Term Growth?

Commercial Metals Company CMC has been gaining from robust demand in North America for each of its major product lines. In the North America Steel Group segment, the steel products metal margin increased by $132 per ton in the fiscal first quarter 2026 from the first quarter of fiscal 2025, achieving a rise for the second consecutive quarter. The segment’s steel products margin climbed to the highest level in three years.

The segment posted adjusted EBITDA of $294 million in the fiscal first quarter of 2026, marking a year-over-year increase of 57.9%.

While the company expects the North America Steel Group segment’s adjusted EBITDA to be lower sequentially in the second fiscal quarter due to normal seasonal volume trends and planned maintenance outages, the segment's long-term view remains strong. 

The segment gained from Transform, Advance, Grow (TAG) initiative efforts, with the scrap optimization initiatives launched in fiscal 2025, aiding metal margin expansion. The TAG program aims to drive consistency across all areas of the business. The program is designed to optimize logistics, reduce input consumption, lower costs and boost energy efficiency. This is expected to aid the North America Steel Group segment in the upcoming quarters. The segment will also gain from Arizona 2 Micro-Mill, which is now operational and aided in the company’s fiscal first-quarter performance. 

The company expects rebar consumption to be aided by strong public sector construction spending. The structural trends are expected to be durable, serving as a significant catalyst for long-term growth.

Commercial Metals’ Peers With Business in North America

Cleveland-Cliffs Inc. CLF reported adjusted EBITDA of $37 million in 2025, marking a significant decline from $773 million in 2024. The company’s results bore the impacts of weak demand from the automotive sector and lower steel prices. Cleveland-Cliffs has, however, been executing significant cost-reduction initiatives. The company expects further cost reduction in 2026, which will aid Cleveland-Cliffs’ margins.

Steel Dynamics, Inc. STLD reported record steel shipments in 2025. It registered an adjusted EBITDA of $505 million in the fourth quarter of 2025, marking a year-over-year increase of 36%. Adjusted EBITDA in 2025 was $2.15 billion, lower than $2.5 billion in 2024. Steel Dynamics is providing innovative alternative metal solutions to its customers, employing its expertise in operating highly efficient, low-cost melting, casting and rolling facilities.

The company is developing a lower-carbon facility that offers an energy-efficient alternative to traditional production. This facility is expected to diversify and enhance Steel Dynamics' high-margin, value-added product portfolio.

CMC’s Price Performance, Valuations & Estimates

Commercial Metals shares have gained 50.1% in the past year compared with the industry’s 60.6% growth. In comparison, the Zacks Basic Materials sector and the S&P 500 have returned 55% and 18.4%, respectively.

Commercial Metals is currently trading at a forward price/sales ratio of 0.90 compared with the industry's 1.69.

Cleveland-Cliffs is a cheaper option, trading at a forward price/sales ratio of 0.29, while Steel Dynamics is trading at a higher 1.36.

The Zacks Consensus Estimate for Commercial Metals’ fiscal 2026 sales is $8.89 billion, indicating a 13.9% year-over-year jump. The consensus mark for the year’s earnings is pegged at $7.34 per share, indicating a year-over-year upsurge of 134.5%.

The Zacks Consensus Estimate for fiscal 2027 sales implies 5.7% year-over-year growth. The same for earnings suggests a dip of 1.6%.
EPS estimates for fiscal 2026 and 2027 have moved north over the past 60 days.

CMC currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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