$18.30
$67.82
bear $18.30
base $47.80
bull $67.82
margin of safety $25.00
market price* $64.98
Commercial Metals (CMC) makes steel from recycled scrap in electric-arc mills (including newer "micro mills"), fabricates rebar and other construction steel, and since December 2025 also makes precast concrete products. In the quarter to May 31, 2026, North America Steel was about 72% of sales, the Construction Solutions Group (fabrication, Tensar geogrid products and now precast) about 16%, and the Europe Steel Group (Poland) about 12%. The business is strongly cyclical: the cash the business itself produces for owners and lenders (operating cash flow, less swings in working capital, stock compensation and the capital spending needed to stay in business, before paying interest) ranged from about $0.5 per share in fiscal 2017 to about $7.5 in fiscal 2022. What changed since our August 2026 estimate ($3.95 / $27.06 / $51.37 for bear / base / bull): the prior estimate used a much higher return hurdle and a different earnings measure, so it is not directly comparable. This update applies a flat 6% discount rate, values the business before its lenders and then subtracts what it owes, and treats the unpaid PSG judgment (below) explicitly as a liability. It also uses the nine-month report to May 31, 2026, which shows the two acquisitions contributing. The fiscal 2026 annual report had not yet been filed. How we measured earnings. We take operating cash flow, remove working-capital swings, subtract stock compensation, and subtract maintenance capital spending. In years when sales fell we treated all capital spending as maintenance, so fiscal 2023 to 2025 owner earnings absorb the heavy cost of building the third (Arizona) and fourth (West Virginia) micro mills, which makes our level conservative. In fiscal 2017 to 2019 the company reported cash collected on securitized receivables in investing activities; we put those amounts back so the years compare fairly. Owner earnings per share by year, fiscal 2016 to 2025: $0.82, $(0.03), $1.37, $2.03, $2.37, $3.44, $7.11, $4.47, $3.72, $2.07. Adding back cash interest paid gives the cash the business itself produced before its lenders: $1.46, $0.53, $1.71, $2.58, $2.87, $3.91, $7.49, $5.01, $4.15, $2.52. The level we use is the median of fiscal 2019 to 2025, $3.91 per share (about $437 million a year on 111.7 million diluted shares). Seven years spans the pandemic low, the 2021-2023 boom and the weak fiscal 2025, so it covers a full cycle. We exclude fiscal 2016 to 2018, a prolonged industry low, because they pre-date the Tensar acquisition and the recent mill investments; that low is carried in the bear case instead. Growth reconciliation: this cash measure fell about 39% in fiscal 2025 ($4.15 to $2.52 per share; owner earnings per share fell 44%). Our base case starts year one at the normal level plus the acquisitions, about $4.94 per share, which is above the latest fiscal year; it assumes no growth after that. The dated reasons are in the filings: net earnings for the nine months to May 31, 2026 were $443 million versus a $67 million loss a year earlier, North America Steel adjusted EBITDA was $817 million versus $503 million, and the Foley (closed December 15, 2025, about $1.84 billion) and CP&P (closed December 1, 2025, $675 million) precast acquisitions are now owned. Acquisitions. Since closing, Foley reported about $158 million of sales and $15 million of pre-tax earnings, and CP&P about $162 million and $9 million, each after a one-year charge for amortizing the acquired order backlog ($48.5 million and $30.5 million in total for the year), which will not recur. From those results, adding back non-cash amortization and depreciation and deducting maintenance spending and tax, we estimate the two businesses earn about $115 million a year for owners in the base case. This is annualized from roughly six months of results and could not be checked against a full year, so the cases use $80 million, $115 million and $135 million. Because acquired customer relationships are amortized over 10 years, we hold this income for ten years and then fade it to zero over the next ten rather than treating it as permanent. The three cases. Growth credited: none beyond the acquisitions already closed. We left out any earnings from the fourth micro mill, from management's margin-improvement program and from a stronger construction market, because none has yet shown up in a full year of results. - Bear: a construction downturn like fiscal 2016 to 2018 (the company's own record) holds the existing business at $191 million a year (the fiscal 2018 level, $1.71 per share) for four years, then it recovers only to the fiscal 2025 level of $281 million ($2.52 per share); precast earns $80 million. The unpaid litigation and the second PSG lawsuit are both charged. The business is worth about $5.13 billion ($45.93 per share) and owes about $3.09 billion ($27.63 per share), leaving $2.04 billion, or $18.30 per share. Even here, business cash of about $271 million a year covers annual interest of about $179 million. - Base: the existing business earns $437 million a year at the seven-year median; precast earns $115 million. The business is worth about $8.36 billion ($74.85 per share) and owes about $3.02 billion ($27.05 per share), leaving $5.34 billion, or $47.80 per share. - Bull: the existing business earns the fiscal 2023 level of $560 million ($5.01 per share), as a demonstrated post-boom level that the company has already reached, and precast earns $135 million. The business is worth about $10.60 billion ($94.87 per share) and owes about $3.02 billion, leaving $7.58 billion, or $67.82 per share. What it owes. Borrowings including finance leases total $3.43 billion at May 31, 2026: $300 million each of 4.125% notes due 2030, 3.875% due 2031 and 4.375% due 2032, $1.0 billion of 5.75% notes due 2033, $1.0 billion of 6.0% notes due 2035, $145 million of 4.0% bonds due 2047, $150 million of 4.625% bonds due 2032, about $192 million of finance leases, and about $42 million of short-term and other borrowings. The blended rate is about 5.2% and nothing falls due before 2030. Because most of it costs less than 6% for years, we reduced the debt by about $128 million. The $1.0 billion revolving credit line, available to December 2030, was undrawn and the company reported it was in compliance with its interest-coverage and debt-to-capitalization covenants. We offset the debt with about $560 million of cash. We also subtract the unpaid PSG antitrust judgment: a jury awarded $110 million in November 2024, trebled to $330 million, and after post-judgment interest the company had accrued $373.5 million at May 31, 2026. A new-trial motion was denied September 29, 2025 and the company has appealed to the Ninth Circuit. We deduct it after an assumed 25% tax deduction ($280 million, about $2.51 per share), and the bear case also adds a second PSG suit seeking about $29 million in compensatory damages, which could be trebled. If the judgment were overturned, value would rise by about $2.51 per share; we do not count that. What would make this wrong. Each $100 million a year of lasting change in the existing business's cash earnings moves the base value by about $15 per share. Steel prices and margins, import competition and construction demand are the main drivers, and North America Steel's recent recovery could partly reverse. Goodwill of about $2.1 billion from acquisitions would be at risk if precast underperforms. A larger litigation loss than accrued would reduce value dollar for dollar.