Why Commercial Metals Company (NYSE: CMC) stock is going gangbusters today

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Commercial Metals Company (NYSE: CMC) stock rose over 7.2% in the pre-market session of January 6th, 2019 (Source: Google finance) after the company posted mixed results for the first quarter of FY 20 due to continued performance of the U.S. non-residential construction sector, which led to the solid performances in the Americas Mills and Fabrication segments. At the end of November 2019, the company generated cash and cash equivalents of $224.8 million and availability under the Company’s credit and accounts receivable facilities stood at $659.9 million.

CMC in the first quarter of FY 20 has reported the adjusted earnings per share of 73 cents, beating the analysts’ estimates for the adjusted earnings per share of 54 cents, according to analysts polled by Thomson Reuters. The company had reported the adjusted revenue growth of 8 percent to $1.39 billion in the first quarter of FY 20, missing the analysts’ estimates for revenue of $1.43 billion.

Moreover, Americas Recycling segment’s adjusted EBITDA decreased to $3.4 million in the first quarter of fiscal 2020 compared to adjusted EBITDA of $15.4 million for the prior year quarter due to 33% decrease in the average ferrous prices. Americas Mills segment’s adjusted EBITDA rose 36% to $155 million for the first quarter of fiscal 2020.  Volumes increased 42% compared to the prior year period, mainly due to additional production from acquired facilities. Americas Fabrication segment posted adjusted EBITDA of $17.5 million for the first quarter of fiscal 2020, which is a significant improvement from an adjusted EBITDA loss of $37 million for the first quarter of fiscal 2019.

Additionally, the company has declared a quarterly dividend of $0.12 per share of CMC common stock payable to stockholders of record on January 15, 2020, which will be payable on January 30, 2020.

CMC anticipate the construction and infrastructure demand to remain resilient though the second quarter will affected due to typical seasonality related to holidays and winter weather conditions affecting construction activity. The company expects metal margin to remain above the historical cycle average, but expected to decline from first quarter levels. The company anticipates the progress in optimizing the expanded domestic mill network during the first quarter will yield benefits going forward.  The company expects Fabrication to continue to be profitable, while Recycling should benefit from the recent rebound in ferrous scrap prices.  The company expects the challenges to be there for the Polish operations until the current overhang of imports to the European Union unwinds

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