Commercial Metals Profitability Analysis

CMC Stock  USD 61.37  0.78  1.26%   
Based on Commercial Metals' profitability indicators, Commercial Metals' profitability may be sliding down. It has an above-average likelihood of reporting lower numbers next quarter. Profitability indicators assess Commercial Metals' ability to earn profits and add value for shareholders.
 
Net Income  
First Reported
1989-05-31
Previous Quarter
119.4 M
Current Value
103.9 M
Quarterly Volatility
69.8 M
 
Oil Shock
 
Dot-com Bubble
 
Housing Crash
 
Credit Downgrade
 
Yuan Drop
 
Covid
At present, Commercial Metals' EV To Sales is projected to increase slightly based on the last few years of reporting. The current year's Sales General And Administrative To Revenue is expected to grow to 0.06, whereas Days Sales Outstanding is forecasted to decline to 39.45. At present, Commercial Metals' Income Before Tax is projected to increase significantly based on the last few years of reporting. The current year's Net Income is expected to grow to about 509.8 M, whereas Accumulated Other Comprehensive Income is forecasted to decline to (90.2 M).
Current ValueLast YearChange From Last Year 10 Year Trend
Gross Profit Margin0.110.1714
Way Down
Pretty Stable
Net Profit Margin0.06430.0613
Sufficiently Up
Slightly volatile
Operating Profit Margin0.09190.0875
Sufficiently Up
Slightly volatile
Pretax Profit Margin0.08420.0802
Sufficiently Up
Slightly volatile
Return On Assets0.04010.0712
Way Down
Slightly volatile
Return On Equity0.0880.1129
Significantly Down
Slightly volatile
For Commercial Metals profitability analysis, we use financial ratios and fundamental drivers that measure the ability of Commercial Metals to generate income relative to revenue, assets, operating costs, and current equity. These fundamental indicators attest to how well Commercial Metals utilizes its assets to generate profit and value for its shareholders. The profitability module also shows relationships between Commercial Metals's most relevant fundamental drivers. It provides multiple suggestions of what could affect the performance of Commercial Metals over time as well as its relative position and ranking within its peers.
  

Commercial Metals' Revenue Breakdown by Earning Segment

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Is Metals & Mining space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Commercial Metals. If investors know Commercial will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Commercial Metals listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
(0.43)
Dividend Share
0.68
Earnings Share
4.14
Revenue Per Share
68.419
Quarterly Revenue Growth
(0.1)
The market value of Commercial Metals is measured differently than its book value, which is the value of Commercial that is recorded on the company's balance sheet. Investors also form their own opinion of Commercial Metals' value that differs from its market value or its book value, called intrinsic value, which is Commercial Metals' true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Commercial Metals' market value can be influenced by many factors that don't directly affect Commercial Metals' underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Commercial Metals' value and its price as these two are different measures arrived at by different means. Investors typically determine if Commercial Metals is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Commercial Metals' price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.

Commercial Metals Return On Asset vs. Return On Equity Fundamental Analysis

Comparative valuation techniques use various fundamental indicators to help in determining Commercial Metals's current stock value. Our valuation model uses many indicators to compare Commercial Metals value to that of its competitors to determine the firm's financial worth.
Commercial Metals is rated fifth in return on equity category among its peers. It is rated below average in return on asset category among its peers reporting about  0.56  of Return On Asset per Return On Equity. The ratio of Return On Equity to Return On Asset for Commercial Metals is roughly  1.79 . At present, Commercial Metals' Return On Equity is projected to increase slightly based on the last few years of reporting. The reason why the comparable model can be used in almost all circumstances is due to the vast number of multiples that can be utilized, such as the price-to-earnings (P/E), price-to-book (P/B), price-to-sales (P/S), price-to-cash flow (P/CF), and many others. The P/E ratio is the most commonly used of these ratios because it focuses on the Commercial Metals' earnings, one of the primary drivers of an investment's value.

Commercial Metals' Earnings Breakdown by Geography

Commercial Return On Asset vs. Return On Equity

Return on Equity or ROE tells company stockholders how effectually their money is being utilized or reinvested. It is a useful ratio when analyzing company profitability or the management effectiveness given the capital invested by the shareholders. ROE shows how efficiently a company utilizes investments to generate income.

Commercial Metals

Return On Equity

 = 

Net Income

Total Equity

 = 
0.12
For most industries, Return on Equity between 10% and 30% are considered desirable to provide dividends to owners and have funds for the future growth of the company. Investors should be very careful using ROE as the only efficiency indicator because ROE can be high if a company is heavily leveraged.
Return on Asset or ROA shows how effective is the management of the company in generating income from utilizing all of the assets at their disposal. It is a useful ratio to evaluate the performance of different departments of a company as well as to understand management performance over time.

Commercial Metals

Return On Asset

 = 

Net Income

Total Assets

 = 
0.0644
Return on Asset measures overall efficiency of a company in generating profits from its total assets. It is expressed as the percentage of profits earned per dollar of Asset. A low ROA typically means that a company is asset-intensive and therefore will needs more money to continue generating revenue in the future.

Commercial Return On Asset Comparison

Commercial Metals is currently under evaluation in return on asset category among its peers.

Commercial Metals Profitability Projections

The most important aspect of a successful company is its ability to generate a profit. For investors in Commercial Metals, profitability is also one of the essential criteria for including it into their portfolios because, without profit, Commercial Metals will eventually generate negative long term returns. The profitability progress is the general direction of Commercial Metals' change in net profit over the period of time. It can combine multiple indicators of Commercial Metals, where stable trends show no significant progress. An accelerating trend is seen as positive, while a decreasing one is unfavorable. A rising trend means that profits are rising, and operational efficiency may be rising as well. A decreasing trend is a sign of poor performance and may indicate upcoming losses.
Last ReportedProjected for Next Year
Accumulated Other Comprehensive Income-86 M-90.2 M
Operating Income693.6 M728.3 M
Income Before Tax635.7 M667.5 M
Total Other Income Expense Net-57.9 M-55 M
Net Income485.5 M509.8 M
Income Tax Expense150.2 M157.7 M
Net Income Applicable To Common Shares988.7 MB
Net Income From Continuing Ops485.5 M323 M
Non Operating Income Net Other298.3 M313.2 M
Interest Income36.1 M45.1 M
Net Interest Income-47.9 M-50.3 M
Change To Netincome105.1 M110.4 M
Net Income Per Share 4.19  4.40 
Income Quality 1.85  2.21 
Net Income Per E B T 0.76  0.57 

Commercial Profitability Driver Comparison

Profitability drivers are factors that can directly affect your investment outlook on Commercial Metals. Investors often realize that things won't turn out the way they predict. There are maybe way too many unforeseen events and contingencies during the holding period of Commercial Metals position where the market behavior may be hard to predict, tax policy changes, gold or oil price hikes, calamities change, and many others. The question is, are you prepared for these unexpected events? Although some of these situations are obviously beyond your control, you can still follow the important profit indicators to know where you should focus on when things like this occur. Below are some of the Commercial Metals' important profitability drivers and their relationship over time.

Commercial Metals Profitability Trends

Commercial Metals profitability trend refers to the progression of profit or loss within a business. An upward trend means that Commercial Metals' profit has generally increased over time, and a downward profitability trend means profits are declining. Recognizing problems early in profitability trends allows investors to address revenue and cost issues in advance. Investors and analysts usually monitor three types of profitability trends: gross, operating, and net. Gross profit is the difference between revenue and costs of goods sold. Operating profit is Commercial Metals' gross profit minus its overhead. After you account for other unusual revenue, expenses, and costs, you get net profit. Gross profit trends are often a good indicator of future profitability. If you have high gross profit margins, you have a better chance to cover overhead and make money.

Commercial Metals Profitability Drivers Correlations

One of the toughest challenges investors face today is learning how to quickly synthesize and read into endless financial statements and information provided by the company, SEC reporting, and various external parties. Understanding the correlation between Commercial Metals different financial indicators related to revenue and profit generation helps investors identify and prioritize their investing strategies towards Commercial Metals in a much-optimized way. Analyzing correlations between profit drivers that are directly associated with dollar figures is the most effective way to break down Commercial Metals' future profitability.

Use Commercial Metals in pair-trading

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Commercial Metals position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Commercial Metals will appreciate offsetting losses from the drop in the long position's value.

Commercial Metals Pair Trading

Commercial Metals Pair Trading Analysis

The ability to find closely correlated positions to Commercial Metals could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Commercial Metals when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Commercial Metals - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Commercial Metals to buy it.
The correlation of Commercial Metals is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Commercial Metals moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Commercial Metals moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Commercial Metals can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching

Use Investing Themes to Complement your Commercial Metals position

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When determining whether Commercial Metals offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Commercial Metals' financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Commercial Metals Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Commercial Metals Stock:
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For information on how to trade Commercial Stock refer to our How to Trade Commercial Stock guide.
You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
To fully project Commercial Metals' future profitability, investors should examine all historical financial statements. These statements provide investors with a comprehensive snapshot of the financial position of Commercial Metals at a specified time, usually calculated after every quarter, six months, or one year. Three primary documents fall into the category of financial statements. These documents include Commercial Metals' income statement, its balance sheet, and the statement of cash flows.
Potential Commercial Metals investors and stakeholders can use historical trends found within financial statements to determine how well the company is positioned for the future. Although Commercial Metals investors may work on each financial statement separately, they are all related. The changes in Commercial Metals's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Commercial Metals's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.