Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model NEW YORK ( TheStreet) -- Commercial Metals Company (NYSE: CMC) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels, good cash flow from operations, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.
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- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Metals & Mining industry average. The net income increased by 12.5% when compared to the same quarter one year prior, going from $36.17 million to $40.68 million.
- Net operating cash flow has significantly increased by 434.22% to $95.76 million when compared to the same quarter last year. In addition, COMMERCIAL METALS has also vastly surpassed the industry average cash flow growth rate of -17.58%.
- CMC's share price has surged by 27.94% over the past year, reflecting the market's general trend, despite their weak earnings growth during the last quarter. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- COMMERCIAL METALS's earnings per share declined by 10.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, COMMERCIAL METALS continued to lose money by earning -$0.83 versus -$1.48 in the prior year. This year, the market expects an improvement in earnings ($0.95 versus -$0.83).
-- Written by a member of TheStreet Ratings Staff