Nucor Corporation (NYSE: NUE) and Commercial Metals (NYSE:CMC) are both mid-cap basic materials companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, profitability, earnings, valuation, dividends, institutional ownership and risk.

Profitability

This table compares Nucor Corporation and Commercial Metals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nucor Corporation 6.08% 13.39% 7.20%
Commercial Metals 1.57% 7.84% 3.42%

Analyst Recommendations

This is a summary of current ratings and recommmendations for Nucor Corporation and Commercial Metals, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nucor Corporation 0 6 9 0 2.60
Commercial Metals 2 3 3 0 2.13

Nucor Corporation presently has a consensus price target of $67.24, suggesting a potential upside of 17.10%. Commercial Metals has a consensus price target of $20.63, suggesting a potential upside of 1.05%. Given Nucor Corporation’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Nucor Corporation is more favorable than Commercial Metals.

Volatility & Risk

Nucor Corporation has a beta of 1.54, meaning that its stock price is 54% more volatile than the S&P 500. Comparatively, Commercial Metals has a beta of 1.22, meaning that its stock price is 22% more volatile than the S&P 500.

Valuation & Earnings

This table compares Nucor Corporation and Commercial Metals’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Nucor Corporation $18.24 billion 1.01 $2.67 billion $3.45 16.64
Commercial Metals $4.82 billion 0.49 $306.06 million $0.65 31.40

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

Insider & Institutional Ownership

74.9% of Nucor Corporation shares are held by institutional investors. Comparatively, 90.6% of Commercial Metals shares are held by institutional investors. 0.7% of Nucor Corporation shares are held by company insiders. Comparatively, 1.3% of Commercial Metals 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.

Dividends

Nucor Corporation pays an annual dividend of $1.51 per share and has a dividend yield of 2.6%. Commercial Metals pays an annual dividend of $0.48 per share and has a dividend yield of 2.4%. Nucor Corporation pays out 43.8% of its earnings in the form of a dividend. Commercial Metals pays out 73.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Commercial Metals has increased its dividend for 43 consecutive years. Nucor Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Nucor Corporation beats Commercial Metals on 13 of the 17 factors compared between the two stocks.

Nucor Corporation Company Profile

Nucor Corporation (Nucor) manufactures steel and steel products. The Company produces direct reduced iron (DRI) for use in its steel mills. It operates in three segments: steel mills, steel products and raw materials. The steel mills segment produces and distributes sheet steel (hot-rolled, cold-rolled and galvanized), plate steel, structural steel (wide-flange beams, beam blanks, H-piling and sheet piling) and bar steel (blooms, billets, concrete reinforcing bar, merchant bar, wire rod and special bar quality). The steel products segment produces steel joists and joist girders, steel deck, fabricated concrete reinforcing steel and cold finished steel. The raw materials produces DRI; brokers ferrous and nonferrous metals, pig iron, HBI and DRI; supplies ferro-alloys, and processes ferrous and nonferrous scrap metal. It also processes ferrous and nonferrous metals and brokers ferrous and nonferrous metals, pig iron, hot briquetted iron (HBI) and DRI.

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.

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