CMC

Commercial Metals ($CMC) Executives Show Conviction with Consecutive Purchases as TAG Program Delivers Strong Results

10/21/2025 17:20

Commercial Metals Company ($CMC), a mid-cap steel manufacturer and recycler, has captured investor attention through a compelling pattern of insider buying that aligns with strong operational performance. Founded in 1915 and headquartered in Irving, Texas, CMC operates across North America, Europe, and emerging business segments, serving construction, infrastructure, energy, and military markets with steel products, recycled scrap metals, and soil stabilization solutions. The insider trading activity tells a story of executive confidence during market volatility. On March 27, 2025, President and CEO Peter Matt purchased 6,100 shares at $48.30 per share, investing approximately $295,000 when the stock had declined from $60+ levels in late 2024 to the $40s. More notably, Director John McPherson has shown persistent conviction with two significant purchases. He first bought 2,475 shares at $40.42 on April 4, then added another 1,722 shares at $58.38 on October 20. Both transactions were valued at approximately $100,000, representing over $200,000 in total investment over six months. This sustained insider buying reflects deep confidence in CMC's fundamentals, validated by recently reported strong Q4 and full fiscal year 2025 results. Fourth-quarter revenue reached $2.11 billion, up 5.9% year-over-year and beating analyst estimates by 2.18%. Adjusted earnings per share of $1.37 surged 52.2% compared to the prior year and exceeded consensus by 3.79%. Core EBITDA of $291.4 million achieved a healthy 13.8% margin. The Transform, Advance, and Grow (TAG) program has been a key driver of operational excellence. This multi-year initiative exceeded expectations in fiscal 2025, delivering margin expansion across segments. The North America Steel Group improved metal margins by $69 per ton sequentially, with EBITDA growing 18% year-over-year. Europe Steel Group turned profitable from losses, benefiting from CO2 credits and higher metal margins. The Emerging Businesses Group achieved record quarterly results with 19.1% EBITDA growth. CMC's financial health provides a solid foundation for growth. The company maintains $1.04 billion in cash and $1.9 billion in available liquidity, supporting operational flexibility and strategic investments. With a conservative debt-to-equity ratio of 0.33 and strong current ratio of 2.86, the balance sheet remains robust. The company has paid dividends for 244 consecutive quarters and executed nearly $50 million in share repurchases during Q4, with $205 million remaining authorized. Investors should monitor key variables including metal price volatility and construction demand sustainability. As a cyclical steel manufacturer, CMC is sensitive to raw material costs and construction activity. However, the company's integrated recycling operations provide cost efficiency advantages, while diversified end markets help mitigate concentration risks. The stock currently trades at $61.29 (as of October 21), representing a 24.94% year-to-date gain that significantly outperforms the S&P 500's 14.62% rise. While insiders purchased shares in the $40s, McPherson's recent purchase at $58+ suggests management sees further upside potential at current levels. Looking forward, CMC expects Q1 fiscal 2026 results consistent with Q4 performance, with anticipated margin improvements in North America Steel Group. Pending acquisitions of Foley Products Company and Concrete Pipe & Precast are expected to enhance growth platforms and expand the commercial portfolio. While insider buying alone shouldn't drive investment decisions, the combination of executive confidence, operational improvements, and strong financial positioning creates a compelling narrative for $CMC. However, investors should consider the cyclical nature of the steel industry and current relatively high valuation metrics (EV/EBITDA of 18.5x) when timing entry points and managing risk exposure.