Head to Head Comparison: Commercial Metals (CMC) versus Timkensteel (TMST)

Commercial Metals (NYSE: CMC) and Timkensteel (NYSE:TMST) are both basic materials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, earnings, risk, dividends, analyst recommendations and profitability.

Earnings & Valuation

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This table compares Commercial Metals and Timkensteel’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Commercial Metals $4.57 billion 0.49 $46.33 million $0.62 31.21
Timkensteel $1.33 billion 0.50 -$43.80 million ($1.00) -14.92

Commercial Metals has higher revenue and earnings than Timkensteel. Timkensteel is trading at a lower price-to-earnings ratio than Commercial Metals, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Commercial Metals has a beta of 1.34, meaning that its stock price is 34% more volatile than the S&P 500. Comparatively, Timkensteel has a beta of 2.04, meaning that its stock price is 104% more volatile than the S&P 500.

Institutional & Insider Ownership

88.2% of Commercial Metals shares are held by institutional investors. Comparatively, 75.0% of Timkensteel shares are held by institutional investors. 1.5% of Commercial Metals shares are held by company insiders. Comparatively, 8.2% of Timkensteel shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Commercial Metals and Timkensteel’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Commercial Metals 1.15% 8.05% 3.81%
Timkensteel -3.33% -7.56% -3.86%

Analyst Ratings

This is a summary of recent recommendations for Commercial Metals and Timkensteel, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Commercial Metals 3 2 4 0 2.11
Timkensteel 0 2 2 0 2.50

Commercial Metals currently has a consensus target price of $23.00, suggesting a potential upside of 18.86%. Timkensteel has a consensus target price of $19.25, suggesting a potential upside of 29.02%. Given Timkensteel’s stronger consensus rating and higher probable upside, analysts clearly believe Timkensteel is more favorable than Commercial Metals.

Dividends

Commercial Metals pays an annual dividend of $0.48 per share and has a dividend yield of 2.5%. Timkensteel does not pay a dividend. Commercial Metals pays out 77.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Commercial Metals beats Timkensteel on 9 of the 15 factors compared between the two stocks.

Commercial Metals Company Profile

Commercial Metals Company, together with its subsidiaries, manufactures, recycles and markets steel and metal products, related materials and services through a network. The Company’s Americas Recycling segment processes scrap metals for use as a raw material by manufacturers of new metal products. The Americas Mills segment consists of steel mills, commonly referred to as minimills that produce reinforcing bar (rebar), angles, flats and rounds. Its Americas Fabrication segment consists of its steel fabrication facilities that bend, weld, cut and fabricate steel, primarily rebar. Its International Mill segment consists of its mill, recycling and fabrication operations located in Poland. Its International Marketing and Distribution segment includes international operations for the sales, distribution and processing of primary and secondary metals, fabricated metals, semi-finished, long and flat steel products, and other industrial products.

Timkensteel Company Profile

TimkenSteel Corporation manufactures alloy steel, as well as carbon and micro-alloy steel. The Company’s portfolio includes special bar quality (SBQ) bars, seamless mechanical tubing and precision steel components. In addition, the Company supplies machining and thermal treatment services, as well as manage raw material recycling programs, which are used as a feeder system for its melt operations. The Company’s products include SBQ Steel and Seamless Mechanical Steel Tubing, and Value-added Precision Products and Services. Its focus is on alloy steel. The Company manufactures carbon, micro-alloy and alloy steel, sold as ingots, bars and tubes. In addition to its customized steels, the Company also manufactures custom-make precision components. Its products and services are used in a range of demanding applications in the market sectors, such as oil and gas, industrial equipment, mining and power generation.

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