CMC — Trade Idea | 18 March 2026

P1 · Snapshot

CMC — Commercial Metals Company | NYSE

Price

$65.85

Mkt Cap

$7.3B

Beta

1.15

Short Interest

P/E FY1

11.4x

EG FY1

+87%

PEG FY1

0.13

Next Earnings

Mar 19

Trade Direction	STRONG LONG	KPI Momentum	STRONG POSITIVE (+2.48) Sector avg: +1.45
Archetype	Cyclical Recovery	Sector Momentum	Early inflection (ISM new orders 55.8)
Conviction	HIGH	Valuation vs Peers	DEEP DISCOUNT (PE 11.4x vs peer median 17x, PEG 0.13)
Fwd EPS vs Sector	CMC +87% vs sector median 15%	Price vs 200d MA	Moderate (not extended)

Price Target

$79base target (+20%)

$90 bull case (+37%)

90d ATRP: 18% | 3mo vol: 35% | Vol-anchored

4 methods (P/E, P/S, EV/EBITDA, PEG-Fair) | Range: $53 – $110

Business Overview

Commercial Metals Company manufactures, recycles, and fabricates steel and metals products. CMC is undergoing a $2.5B transformation into precast/prestressed concrete infrastructure, positioning it at the center of the IIJA infrastructure spending wave. The precast platform (acquired Q4 2025) adds higher-margin, countercyclical revenue to the traditional steel business. Q2 FY2026 earnings (March 19) will be the first full quarter with precast contribution. CMC operates 12 EAF mills, 50+ steel fabrication plants, and 30+ precast facilities concentrated in the U.S. South, Southwest, and Mountain West — regions containing 46% of undisbursed IIJA funding.

CMC — 3-Year Price History

Investment Case

Positives

PEG 0.13 — absurdly cheap for +87% EPS growth: Forward P/E of 11.4x on +87% EPS growth is the most extreme growth-adjusted discount in the steel peer set. Market is pricing CMC as a declining steel company while ignoring the structural transformation.
Precast transformation not yet re-rated by market: $2.5B deployed into precast/prestressed concrete creates a higher-margin, less-cyclical business that now comprises 20% of EBITDA, yet CMC still trades at a legacy steel multiple.
IIJA tailwind — 46% of infrastructure funding undisbursed: Heavy construction phase is underway in CMC's footprint; rebar demand expected to increase 1.5Mt/year from IIJA alone. Buy America mandates create a domestic moat.
Q2 earnings TOMORROW — first full quarter of precast: March 19 report will reveal precast contribution ($165–175M EBITDA guided for FY26). Beat-and-raise could trigger re-rating.
Zacks #1 rank with estimates being revised upward: Consensus EPS rising 13.89% in last 30 days. Q1 FY26 EPS beat consensus by 18%.

Negatives

$4.2B net debt from acquisitions — elevated leverage: Post-acquisition net debt is the highest in CMC's history. If steel margins compress or precast underperforms, deleveraging could stall.
Integration risk on $2.5B in acquisitions closed 3 months ago: CMC has never managed a program of this scale. 30+ precast facilities across 14 states create execution complexity.
Steel pricing cyclicality — commodity exposed in core business: Core steel business (80% of revenue) remains cyclical. A recession would pressure rebar volumes and pricing regardless of IIJA.
Beta 1.15 with steel sector correlation: In a risk-off environment, steel stocks face greater drawdown risk than defensive sectors.
Housing slowdown risk for construction-adjacent business: Residential construction exposure creates vulnerability if housing activity weakens further.

Algorithmic Verdict STRONG LONG Verdict Score: 82.0 / 100

STRONG LONG / HIGH CONVICTION — Cyclical Recovery Archetype. CMC is undergoing the most dramatic transformation in the steel sector — from commodity EAF steelmaker to integrated infrastructure solutions provider via $2.5B in precast acquisitions. PEG of 0.13 on +87% EPS growth is the cheapest growth-adjusted valuation in the peer set. Q2 FY2026 earnings tomorrow (March 19) is the primary catalyst: first full quarter with precast contribution. Position size: 1.0–1.5% of portfolio.

P2 · Annual Quant

All figures in $B / $ per share | Fiscal year ending Aug 31

Metric	FY2023	FY2024	FY2025	FY2026E	FY2027E	FY2028E
Stock Price ($)	$56	$52▼	$48▼	$66▲	$79▲	$85▲
Revenue ($B)	$8.12	$7.83▼	$7.79▼	$8.25▲	$9.00▲	$9.50▲
Revenue Growth	--	-4%▼	-1%▲	+6%▲	+9%▲	+6%▼
EPS ($)	$5.49	$3.98▼	$3.09▼	$5.77▲	$5.90▲	$6.40▲
EPS Growth	--	-28%▼	-22%▲	+87%▲	+2%▼	+8%▲
PE (trailing)	10.2x	13.1x▼	15.5x▼	11.4x▲	13.4x▼	13.3x▲
PEG	--	NM	NM	0.13▲	6.70▼	1.66▲
Core EBITDA ($M)	$1,050	$850▼	$750▼	$1,200+▲	$1,400▲	$1,500▲
EBITDA Margin	12.9%	10.9%▼	9.6%▼	14.5%▲	15.6%▲	15.8%▲

Analyst Commentary

FY2026 is the inflection point. After two consecutive years of EPS decline (FY24 -28%, FY25 -22%), CMC's FY2026E consensus of $5.77 represents a dramatic +87% reversal. This is driven by the full consolidation of $2.5B in precast acquisitions ($240–250M annualized EBITDA), the TAG operational excellence program ($150M annualized benefit), and accelerating IIJA infrastructure demand in CMC's geographic footprint.

Margin recovery is structural. EBITDA margin bottomed at 9.6% in FY2025 and is projected to recover to 14.5% in FY2026E — a +490bps improvement driven by the higher-margin precast mix shift, TAG program efficiencies, and 127% anti-dumping duty protection on Algerian rebar imports. The precast platform carries structurally higher margins than commodity rebar.

Revenue inflection from organic + inorganic. Revenue declined from $8.12B (FY2023) to $7.79B (FY2025) as steel prices softened. FY2026E of $8.25B (+6%) reflects the precast contribution ($1.3B annualized), partially offset by stable core steel pricing. FY2027E of $9.0B (+9%) projects continued precast ramp plus IIJA volume acceleration in rebar.

Key watch: FY2027 deceleration. Consensus FY2027 EPS of $5.90 (+2% vs FY2026E) suggests the market views the earnings inflection as primarily acquisition-driven rather than organic. If precast synergies ($30–40M by year 3) and IIJA volumes exceed expectations, FY2027 estimates could be revised substantially higher. The Q2 report tomorrow will provide the first data point.

P3 · KPI Heatmap

Score: +3 (Strong Positive) → −3 (Poor) | Two-Tier: 60% Leading / 40% Lagging

KPI	Type	CMC	STLD	NUE	RS	ACA	EXP	KNF	ROCK
Rev/Backlog Guidance	Leading	▲▲▲	▲	—	▲	▲▲	—	▲▲▲	▼
Infra Spending Pipeline	Leading	▲▲▲	▲	▲	▲	▲▲	▲	▲▲	—
Precast/New Product Ramp	Leading	▲▲▲	—	—	—	▲	—	—	▲
Pricing/Margin Guidance	Leading	▲▲	▲	—	▲	▲▲	—	▲▲	—
Capacity Expansion	Leading	▲▲▲	▲▲	▲▲	—	▲	—	▲	▲
Op Margin Trend	Lagging	▲▲	▲	—	▲	▲▲	—	▲▲	—
EPS Surprise	Lagging	▲▲	▲	▼	▲	▲▲	▼	▲▲▲	—
Rev Growth Momentum	Lagging	▲▲	—	▼	▲	▲▲	—	▲▲	—
Composite		2.48	0.87	0.09	0.76	1.76	-0.01	1.89	0.12

KPI Assessment

CMC's weighted KPI average of +2.48 leads the peer group by a significant margin (+0.59 above #2 KNF at +1.89).

Where CMC leads: Rev/Backlog Guidance (+3), Infra Spending Pipeline (+3), Precast/New Product Ramp (+3), and Capacity Expansion (+3) all score maximum — reflecting the $2.5B precast transformation, 46% of undisbursed IIJA funding in CMC's footprint, and 35 new precast facilities integrated. No peer has anything comparable to the precast transformation.

Where CMC is solid but not exceptional: Pricing/Margin Guidance (+2) reflects the 14.9% core EBITDA margin and TAG program, while lagging KPIs all score +2, confirming that leading indicators are translating into real results (52% EBITDA growth, 18% EPS beat).

Key context: The two closest peers by composite (KNF +1.89, ACA +1.76) are also infrastructure-leveraged construction materials companies — validating the sector tailwind thesis. Pure steel plays (NUE +0.09, STLD +0.87) score materially lower.

P4 · Distribution of Returns

Daily Returns | 3-Year Simulated History (756 obs, σ_ann = 35.0%)

Returns Histogram

Return Statistics

Observations	756
Mean Daily Return	+0.065%
Median Daily Return	+0.040%
Std Dev (Daily)	2.205%
Annualised Vol	35.0%
Ann. Return (sim.)	+16.4%
Skewness	+0.12
Excess Kurtosis	4.20
Max Daily Gain	+10.2%
Max Daily Loss	−11.5%
% Positive Days	52.4%
% Negative Days	47.6%
VaR 95% (1-day)	−3.56%
VaR 99% (1-day)	−5.08%

Average True Range % — Stock & Competitors

Ticker	5d (1W)	10d (2W)	20d (1M)	60d (1Q)	90d (3M)	Beta
CMC	3.50%	4.95%	7.00%	12.12%	18.00%	1.15
STLD	3.92%	5.54%	7.83%	13.56%	16.60%	1.43
NUE	4.15%	5.87%	8.30%	14.37%	17.60%	1.70
RS	2.52%	3.56%	5.04%	8.72%	10.68%	0.92
ACA	2.22%	3.14%	4.44%	7.69%	9.42%	0.81
EXP	3.59%	5.08%	7.18%	12.43%	15.22%	1.31
KNF	1.67%	2.36%	3.34%	5.78%	7.08%	0.61

ATRP estimated via Parkinson's range proxy (σ_daily × 1.596 × √horizon). Highlighted row = CMC.

Moderate-to-high volatility for steel. CMC's 35% annualised vol is in line with the steel peer group (STLD 1.43 beta, NUE 1.70 beta). The distribution shows slight positive skew (+0.12), consistent with the recovery from multi-year lows. Higher kurtosis (4.20) than a normal distribution indicates fat tails — earnings events can drive outsized moves.

ATRP supports the vertical spread structure. CMC's 90-day ATRP of 18% implies a $66 stock could move $12 (to $78) over 3 months — supportive of the $70/$85 bull call spread breakeven at $73.88. The base case target of $79 is a 1.2-sigma move over 90 days at 35% IV, achievable within normal distribution.

Earnings volatility is the primary event. CMC typically moves 5–8% on earnings. Q2 FY2026 reports tomorrow (March 19) with the first full precast quarter. This event is within the Jun 2026 expiry window. The trade is positioned to capture the post-earnings re-rating.

Risk-adjusted view is favorable. VaR (95%, 1-day) of -3.56% is manageable — a $10K position risks $356 on a bad day. The defined-risk vertical spread caps maximum loss at $388/contract regardless of how far the stock falls.

P5 · Sector Comps

Steel / Construction Materials | Figures in USD | Consensus Estimates

Ticker	Company	Mkt Cap	Price	EPS FY1E	EPS FY2E	EG FY1%	P/E FY1	PEG	EV/EBITDA	P/Sales
CMC	Commercial Metals	$7.3B	$65.85	$5.77	$5.90	+87%	11.4x	0.13	12.8x	1.06x
STLD	Steel Dynamics	$25.4B	$172.34	$10.92	$13.49	+36%	15.8x	0.44	12.5x	1.34x
NUE	Nucor	$37.1B	$163.42	$9.71	$12.87	+29%	16.8x	0.58	10.2x	1.16x
RS	Reliance Inc	$17.4B	$344.56	$16.50	$19.00	+18%	20.9x	1.16	10.8x	1.20x
ACA	Arcosa	$6.3B	$127.50	$4.27	--	+41%	29.9x	0.73	12.5x	2.17x
EXP	Eagle Materials	$5.8B	$186.47	$14.39	$17.97	+8%	13.0x	1.63	11.8x	2.43x
KNF	Knife River	$4.5B	$80.03	$3.18	--	+22%	25.2x	1.00	13.5x	1.30x
Median		$6.3B				+29%	16.8x	0.73	12.5x	1.30x

Comparative Ranking — 8-Factor Composite (RISK_OFF Regime)

Macro(25%) · KPI(10%) · Val.(25%) · Earn.(10%) · Cat.(8%) · Risk(12%) · Trade(2%) · Tech.(8%)

Rank	Ticker	Macro(25%)	KPI(10%)	Val.(25%)	Earn.(10%)	Cat.(8%)	Risk(12%)	Trade(2%)	Tech.(8%)	Composite
1	CMC	85	88	90	85	80	75	65	70	83.8
2	STLD	80	75	75	80	65	65	60	65	74.2
3	NUE	80	70	78	75	60	60	55	60	71.4
4	USCR	82	65	70	60	50	55	50	60	66.7
5	RS	75	60	65	65	55	70	55	55	65.4
6	TMST	65	50	60	45	40	45	45	40	53.0
7	CLF	70	45	50	40	60	35	50	45	51.0

Why CMC

Among 7 steel/construction materials peers, CMC ranks #1 with a composite of 83.8, a full 9.6 points ahead of #2 STLD (74.2). CMC dominates on three critical factors: Valuation (90) with a forward P/E of 11.4x and PEG of 0.13 — the most extreme growth-adjusted discount in the peer set; KPI Momentum (88) driven by 52% EBITDA growth and a transformational precast acquisition strategy; and Catalyst Proximity (80) with Q2 FY26 earnings tomorrow on March 19, the first report showing a full quarter of precast contribution. The market is pricing CMC at a legacy steel multiple (11.4x forward P/E) while ignoring the emerging higher-margin, less-cyclical precast business that now comprises 20% of EBITDA.

3-Year Relative Performance

Rebased to 100 = Mar 2023

Sector Commentary

The steel and construction materials sector is at an inflection point driven by the IIJA infrastructure spending wave. With 46% of IIJA funding ($568B allocated to 68,000 projects) still undisbursed and the "heavy construction" phase now underway, domestic rebar and precast concrete demand is poised for multi-year growth. Buy America mandates in IIJA projects create a protective moat for domestic steel producers. Simultaneously, 127% anti-dumping duties on Algerian rebar imports and data center/manufacturing reshoring provide incremental demand drivers. CMC is uniquely positioned at the intersection of steel and precast infrastructure.

Peer Rationale

STLD ($25B) and NUE ($37B) are the closest EAF steelmaker comps with overlapping product mix. RS ($17B) provides a distribution/processing contrast with premium valuation (20.9x PE). ACA ($6.3B) and KNF ($4.5B) are the closest infrastructure-leveraged construction materials comps, validating the sector tailwind thesis. EXP ($5.8B) provides a cement/wallboard contrast. CMC at $7.3B sits between the mid-cap construction materials names and the large steel producers, with a unique precast transformation catalyst that no peer possesses.

P6 · Drivers / Catalysts / Risks / Trade

CMC | 18 March 2026

Key Drivers

Precast transformation — $2.5B deployed into CP&P and Foley acquisitions creates one of the largest precast concrete platforms in the U.S. with 35 facilities across 14 states. Adds $240–250M annualized EBITDA at higher margins than commodity rebar.

IIJA infrastructure wave — 46% of IIJA funding remains undisbursed, concentrated in CMC's geographic footprint (South, Southwest, Mountain West). Heavy construction phase is underway with rebar demand expected to increase 1.5Mt/year.

TAG operational excellence — $150M annualized EBITDA benefit target from operational efficiency program, driving margin expansion across the steel platform.

Trade protection moat — 127% anti-dumping margin on Algerian rebar + Buy America mandates in IIJA projects protect pricing power for domestic rebar production.

Catalysts

Q2 FY2026 Earnings — March 19 (TOMORROW) — Primary catalyst. First full quarter of precast contribution. EBITDA guidance update, integration progress, and TAG program benefits quantification.

ISM Manufacturing PMI — Apr 1, 2026 — If >52, confirms construction/industrial expansion; CMC benefits from rebar demand correlation.

STLD, NUE Earnings — Apr/May 2026 — Peer read-through on steel pricing, volume trends, and infrastructure demand commentary.

IIJA Disbursement Acceleration | Q2–Q3 2026: Highway and bridge projects entering construction phase = rebar demand inflection in CMC's footprint.

Key Risks

Integration risk on $2.5B acquisitions — CMC has never managed a program of this scale. 30+ precast facilities across 14 states create execution risk; synergy realization ($30–40M by year 3) is uncertain.

Elevated leverage at $4.2B net debt — Post-acquisition leverage is the highest in CMC's history. Steel downturn + integration costs could stress the balance sheet.

Steel pricing cyclicality — Core business (80% of revenue) is commodity-exposed. Rebar pricing weakness from imports or demand shortfall would compress margins.

FY2027 deceleration risk — Consensus FY27 EPS of $5.90 (+2%) suggests market views FY26 as a peak year, capping re-rating potential if precast synergies disappoint.

Post-earnings volatility — With Q2 earnings tomorrow, options premiums reflect pre-earnings IV expansion. A disappointing report could trigger a significant gap down.

Recommended Trade Structure

Bull Call Vertical · CMC · Last: $65.85 · Target: $79 base / $90 bull

Exposure	Ticker	Last	L/S	Type	Expiration	Strike	Cont #	Cont ×	Cost	Impl. Price	Total Cost	P/L
Precast + IIJA recovery	CMC	$65.85	Long	CALL	Jun 2026	$70	1	100	$4.15	$4.15	−$415	+$1,085
Cap at $85 bull target	CMC	$65.85	Short	CALL	Jun 2026	$85	1	100	$0.65	$0.65	+$65	+$65
						NET DEBIT					−$388	+$1,112 (2.87x)

Leg	Description	Amount
P1 · Long	Buy 1× Jun-26 $70 Strike Call @ $4.15 = $415 (debit)	−$415
P2 · Short	Sell 1× Jun-26 $85 Strike Call @ $0.65 = $65 (credit)	+$65
Net Debit	Max loss if both legs expire worthless	$388
Target	CMC ≥ $85 by Jun 2026 expiry
Max Profit	($85 − $70) × 100 − $388 net debit	+$1,112
Reward / Risk	$1,112 / $388	2.87x (287%)

Alternative Structure

Long $75 Call Jun 2026 — Cost: $245/contract. R/R at $90 bull target: 5.12x. Higher conviction play if expecting a significant beat-and-raise on Q2 earnings. Breakeven at $77.45 (+17.6% from spot).

Breakeven

$73.88 (+12.2% from current $65.85). CMC needs to trade above $73.88 at Jun 2026 expiry for the trade to be profitable. Maximum profit of $1,112 is achieved at or above $85.

Bull Case: CMC ≥ $85 (+29.1%)

Beat-and-raise + precast re-rating

Leg	Value	P/L
P1 Long $70C	$15+ intrinsic	+$1,500+
P2 Short $85C	Assigned	−$388+
Net		+$1,112 (+2.87x)

Base Case: CMC = $79 (+20%)

Consensus met, precast on track

Leg	Value	P/L
P1 Long $70C	$9 intrinsic	+$900
P2 Short $85C	Expires OTM	+$0
Net		+$512 (+1.32x)

Bear Case: CMC ≤ $55 (−16%)

Integration issues, steel price weakness

Leg	Value	P/L
P1 Long $70C	$0	−$415
P2 Short $85C	$0	+$65
Net		−$388 (−1.0x)

Price Target Methodology

Method	Peer Median Multiple	Target Metric (FY1)	Implied Price
Forward P/E	13.64x	$5.77 EPS	$78.70
Forward P/S	1.12x	$8.25B revenue / 112.7M shr	$81.95
EV/EBITDA	10.85x	$1,200M EBITDA	$78.25
PEG-Fair (capped)	1.15x peer P/E = 15.7x	$5.77 EPS	$90.59
Price Target Summary			$79 base (+20%) \| $90 bull (+37%)

Range: $53 (bear) – $110 (PEG-fair uncapped) | Base = avg of P/E, P/S, EV/EBITDA methods | Bull requires Q2 beat-and-raise | 90d ATRP 18% supports 1.2σ move to target

Algorithmic Verdict STRONG LONG Verdict Composite: 82.0 / 100

KPI Momentum

88.0

+2.48 vs peer avg +1.00. #1 in peer group. Precast transformation is unmatched.

Valuation

90.0

PEG 0.13 is absurdly cheap. Forward PE 11.4x vs peer median 17x. Deepest discount in set.

Macro Fit

85.0

IIJA beneficiary in RISK_OFF. Infrastructure is countercyclical. 46% funds undisbursed.

Trade Quality

65.0

R/R 2.87x exceeds 2.0x min. Defined risk at $388/contract. Alt: $75C at 5.12x R/R.

STRONG LONG / HIGH CONVICTION. CMC earns an 82.0 verdict composite from exceptional valuation (90) and KPI momentum (88) scores, supported by strong macro fit (85). The $70/$85 bull call spread offers 2.87x R/R with defined risk ($388 max loss) and captures Q2 FY2026 earnings catalyst tomorrow. CMC is the only steel company undergoing a simultaneous business model transformation (precast), macro tailwind (IIJA), and earnings inflection (+87% EPS growth). The market is pricing a legacy steel multiple while ignoring 20% of EBITDA from higher-margin precast operations. Key risk: $2.5B integration execution and $4.2B net debt.

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