CMC

Commercial Metals ($CMC) Insiders Buy Big After Sharp Stock Plunge: CEO and Director Invest Nearly $400,000

04/07/2025 18:18

Commercial Metals Company ($CMC) has seen significant insider buying following a sharp decline in its stock price, signaling potential confidence from top executives despite recent challenges. President Peter Matt purchased 6,100 shares at $48.30 per share on March 27, 2025, investing a total of $294,630. Shortly after, Director John R. McPherson acquired 2,475 shares at $40.42 per share on April 4, 2025, totaling $100,039.50. These purchases came amid a substantial drop in the company's stock price. The timing is particularly notable as CMC's shares plummeted approximately 11.5% in a single day on April 3, 2025, falling from $47.04 to $41.62, and continued declining to $40.95 on April 4. This represents a roughly 34% decrease from the December 2024 peak of around $62 per share. Despite this sharp decline, these insider purchases suggest executives may see long-term value at current price levels. Based in Irving, Texas, Commercial Metals Company manufactures steel products including reinforcing bar (rebar), merchant bar, steel fence posts, wire rod, and Tensar soil stabilization solutions, primarily serving construction and infrastructure markets in the United States and Europe. The company operates 212 facilities across the U.S. and Poland, including electric arc furnace mini-mills, scrap recycling facilities, and steel fabrication plants. However, the company's recent financial performance has been challenging. In its quarter ended November 30, 2024, reported in January 2025, CMC posted adjusted earnings of 78 cents per share, significantly down from $1.63 a year earlier. Revenue decreased by 4.7% to $1.91 billion, slightly above analyst expectations of $1.88 billion. This performance decline is largely attributed to slowing construction and infrastructure markets and falling steel prices. Additionally, the company faces legal challenges. In July 2024, Pacific Steel filed an antitrust lawsuit against Commercial Metals, alleging the company hindered competition by obstructing a mill project in Southern California, thereby raising rebar prices. Pacific Steel claims these actions resulted in $50 million in annual overcharges for rebar purchasers, while Commercial Metals denies any wrongdoing. Market analysts suggest these insider purchases could indicate executives believe the stock is undervalued at current levels. The simultaneous buying activity from both the president and a director provides a particularly strong signal of confidence in the company's long-term prospects. The current median price target from analysts stands at $61.00, suggesting significant upside potential from current levels. However, technical analysts caution that the steel industry is cyclical by nature, and broader market trends and economic indicators should be considered. Construction and infrastructure spending, steel pricing trends, and manufacturing activity in the U.S. and Europe will be crucial factors affecting CMC's future performance. A JP Morgan analyst noted, "The recent price decline reflects broader concerns across the U.S. steel industry, but the insider buying could be a positive signal for long-term value investors. However, the company likely faces near-term challenges from weakness in construction markets and softening steel demand." Commercial Metals Company currently has a market capitalization of approximately $4.6 billion and maintains a regular cash dividend of $0.18 per share, demonstrating continued shareholder return capabilities. The company has also pursued strategic growth initiatives, including the acquisitions of Roane Metals Group LLC and EDSCO Fasteners LLC in 2023 to expand its operations. Considering the insider trading activity and stock price movements, Commercial Metals appears to be navigating challenging market conditions, but its senior leadership demonstrates confidence in the company's long-term outlook. Investors should closely monitor upcoming quarterly results, trends in construction and infrastructure markets, and developments in the antitrust litigation for further insights into the company's trajectory.

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