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Merchandise Company (CMC) kicked off 2023 with strong first quarter earnings results early on Monday. The steel recycler and manufacturer beat analysts’ expectations on improved margins in the North American market. CMC’s stock hit a record high before reversing to close slightly lower.
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Commercial Metals manufactures a wide variety of rebar, wire rods, tension cables and paving dowels that form the foundation of buildings, bridges, highways and major infrastructure. The Irving, Texas-based steel manufacturer and processor recycles more than 19 billion pounds of metal annually through a network of processing plants, recycling facilities and plants in North America and Poland.
Metal and steel prices in the market
First quarter net income was $2.20 per share, up 12% from $1.90 last year. Excluding certain items, adjusted earnings increased 38% from $1.62 per share to $2.24 per share in 2022.
Analysts had expected Commercial Metals to report earnings of $1.96 per share on sales of $2.2 billion.
This result marks the eighth consecutive quarter of revenue growth and the ninth consecutive quarter of revenue growth. However, revenue growth has slowed in the last two quarters, and revenue growth has slowed in the last five quarters.
Average steel prices rose $44 per tonne in North America over the period, while scrap metal prices fell $103 per tonne, boosting margins on Commercial Metal’s steel products.
Downstream bids have improved from last year, the company said, indicating a higher contract backlog and a larger pipeline of construction projects than last year. The average selling price of downstream products has also increased by $307 per ton since last year. Meanwhile, industrial end-market demand remained stable year-on-year.
CMC Stock
Commercial Metals stock jumped to a record high of 52.27 shortly after the market opened. However, the stock reversed and fell 0.55% to close at 50.33. CMC’s stock has risen more than 40% over the last year.
CMC’s share price is below the 50.93 buy point cleared on Friday, but just above the initial entry of just above 50.
Follow Harrison Miller on Twitter for stock news and updates. @IBD_Harrison
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