Commercial Metals Company (NYSE:CMC) just released its quarterly report and things are looking bullish. The company beat expectations with revenues of US$2.0b arriving 3.5% ahead of forecasts. Statutory earnings per share (EPS) were US$1.49, 3.5% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

After the latest results, the consensus from Commercial Metals' seven analysts is for revenues of US$8.15b in 2024, which would reflect a measurable 3.1% decline in revenue compared to the last year of performance. Statutory earnings per share are expected to decrease 9.4% to US$5.31 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$8.11b and earnings per share (EPS) of US$5.15 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at US$61.70, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Commercial Metals, with the most bullish analyst valuing it at US$74.00 and the most bearish at US$54.90 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 4.1% by the end of 2024. This indicates a significant reduction from annual growth of 12% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.2% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Commercial Metals is expected to lag the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Commercial Metals following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Commercial Metals' revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Commercial Metals going out to 2026, and you can see them free on our platform here.

Even so, be aware that Commercial Metals is showing 2 warning signs in our investment analysis , and 1 of those can't be ignored...

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