Wolfe Research has upgraded Commercial Metals Co. (NYSE: CMC) from “Peer Perform” to “Outperform,” reflecting a shift in sentiment toward the company’s growth potential. The upgrade comes amid expectations of rising demand for steel products, driven by federal infrastructure initiatives and increased construction activity across the U.S.
🔹 Infrastructure Stimulus Impact: Anticipated federal infrastructure spending is set to boost demand for CMC’s core products, particularly rebar, creating a tailwind for earnings growth in upcoming quarters.
🔹 Valuation Rebound: Previously viewed as overvalued during a construction slowdown, CMC now appears attractively priced relative to peers, offering an appealing entry point for value-focused investors.
🔹 Strategic Capacity Expansion: Investments in new mill capacity, especially the Arizona facility, are beginning to pay off, positioning CMC to capture market share as domestic demand recovers.
💰 Dividend Fundamentals: CMC pays an annual dividend of $0.72 per share, yielding about 1.5%. With a conservative payout ratio near 24%, the dividend is well-supported by strong cash flows. The company’s history of steady dividends underscores its financial discipline and shareholder-friendly approach.
Investors seeking a stable industrial stock with solid fundamentals and exposure to America’s infrastructure build-out will find CMC’s renewed momentum compelling.