Commercial Metals: A Record Year the Tape Refuses to Price

Precast stumbles, TAG compounds, and CMC pulls forward a $700M buyback while the stock sits 21% off its high

CMC · Earnings Call · 2026-10-15

A defining year the market refuses to believe

Peter Matt opened CMC's fiscal Q4 call with an unusual framing: “fiscal 2026 was a defining year for CMC” — Peter R. Matt, President and Chief Executive Officer · 2026-10-15, a year in which core EBITDA climbed to roughly $1.4 billion from $837 million and core EBITDA margin expanded 380 basis points to 14.5%. The fourth quarter alone delivered about $394 million of core EBITDA, up 35.1% year over year. Metal margin rose $42 per ton sequentially to $652 Metal margin, and the North American Steel Group's adjusted EBITDA advanced 25.2% sequentially to $317 million. Full-year Total Revenue and Operating Income both confirm a genuine earnings inflection. The tape tells a different story. CMC closed October 15 more than 21% below its February 2026 peak, and the trailing 90 trading days are a clean 11.8% decline. So the question of this report is not whether CMC executed — it did — but why a company posting record profitability, deleveraging ahead of schedule, and accelerating buybacks is being sold.

The Precast stumble nobody scripted

The answer starts in the Construction Solutions Group. Precast generated $57.1 million of adjusted EBITDA in the quarter — roughly $20 million short of what management had intimated on the June call. The culprit was residential softness in certain Southeastern markets, where lower volumes burned a disproportionate share of earnings because the Foley and CP&P portfolios carry very different margins and integration is still mid-flight. That is a company-specific wound, not a sector boilerplate one.

So, it is very disappointing. it is kind of not how we would have written the script. What I want to be categorically clear about is that we are not overly concerned... Our margins in spite of that volume loss remained at 30%.
Peter R. Matt, President and Chief Executive Officer · 2026-10-15

What makes it a story is the contrast with the prior call, where the same team insisted “we are very confident we can reach the goal” — Peter R. Matt, President and Chief Executive Officer · 2026-06-25 on Precast. The Precast business is now the single swing factor between CMC's execution narrative and its muted multiple. Management's defense — that residential is running at 50%–60% of a normal environment, that nonres and infrastructure backfilled the backlog, that bookings rose 12.6% sequentially and pricing keeps rising — is credible, and Peter Matt repeats the $240–250 million annual run-rate target, calling it “a good target for this year” — Peter R. Matt, President and Chief Executive Officer · 2026-10-15. But a quarter of "not how we would have written the script" is exactly the kind of thing a market prices first and asks questions later.

TAG escalates, and a buyback promise is cashed

Against that stumble sits an escalation on the cost side. The TAG initiative — CMC's operational and commercial excellence program — exited fiscal 26 with more than $250 million of gross run-rate benefits and, management now says, a clear line of sight on an additional $100 million by the end of fiscal 2027. On prior calls the run-rate figure was framed closer to $150 million; the program has quietly become a durable source of margin expansion rather than a one-time lift. The bigger capital-markets event is the buyback. Having cut net leverage to 1.9x — inside its stated 2x target — and with capital spending set to fall roughly $200 million to about $400 million in fiscal 2027, management is pulling forward a repurchase plan it had only a year ago deliberately slowed.

We increased it by $600 million, but to get to about a $700 million total authorization. We said we intended to do that over 3 years. What we are saying today is that we are going to pull that forward... I think you should expect a meaningful increase in the amount of shares that we are buying.
Peter R. Matt, President and Chief Executive Officer · 2026-10-15

That is a striking reversal of the October 2025 language, when the same CFO-and-CEO pair promised “we will slow down our share repurchase program and bring it to a level where we're offsetting employee share grants... as our balance sheet comes into line” — Peter Matt, President and Chief Executive Officer · 2025-10-16. The balance sheet has come into line. The Effective Net Cash position flipped to a large net-debt figure after the acquisitions, and Liabilities to Assets jumped alongside it — which is precisely why an accelerated repurchase matters: it is management's loudest available signal that the deleveraging story is done.

Where the demand pillars and the tape actually sit

CMC's pullback is not happening in a vacuum. One of the demand pillars it cites — data centers, alongside power generation, reshoring and institutional work — is being repriced market-wide. The global tape shows AI data centers down more than 5% across both the 30- and 90-day windows with a wall of decliners, and adjacent themes like data-center power and high-bandwidth memory sit in the same declining bucket. A company leaning on data-center construction as a multiyear driver inherits that derating even when its own rebar and merchant bar books are full. On the supply side, the import narrative is the one thread that reads constructively. Section 232 remains effective, recently finalized trade cases have removed hundreds of thousands of tons, and Peter Matt says South Korean long-product imports finally stepped down in September, calling it “durable, supply management that we are working on” — Peter R. Matt, President and Chief Executive Officer · 2026-10-15. On scrap, he expects CMC to outrun input costs: “we feel confident that as we go into the November quarter you are going to see a kind of a gradually improving top line from a ASP perspective and a gradually improving metal margins” — Peter R. Matt, President and Chief Executive Officer · 2026-10-15.

The tension that is the story

Strip it back and CMC is a well-run, mid-cap steel and early-stage-construction name (market cap under $8 billion) whose operating story and equity story have decoupled. Management calls fiscal 2027 “another solid year for CMC” — Peter R. Matt, President and Chief Executive Officer · 2026-10-15 — but the guide itself flags seasonal softness, West Virginia startup costs of $3–5 million a quarter, higher scrap and energy, and a Construction Solutions Group that will decline sequentially. That is a company guiding for a choppy first half while buying back stock in size. The signal worth watching is not the headline EBITDA. It is whether Precast's residential drag really has "taken much if not all of the pain," and whether the accelerated repurchase earns back the 21% the stock has given up. For now, the market and the microphone disagree — and that gap is the whole trade.