Ternium (NYSE: TX) and Commercial Metals (NYSE:CMC) are both mid-cap basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, risk, earnings, institutional ownership, analyst recommendations and valuation.
Ternium pays an annual dividend of $1.10 per share and has a dividend yield of 2.7%. Commercial Metals pays an annual dividend of $0.48 per share and has a dividend yield of 2.0%. Ternium pays out 24.4% of its earnings in the form of a dividend. Commercial Metals pays out 77.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ternium is clearly the better dividend stock, given its higher yield and lower payout ratio.
17.6% of Ternium shares are held by institutional investors. Comparatively, 90.0% of Commercial Metals shares are held by institutional investors. 0.0% of Ternium shares are held by company insiders. Comparatively, 1.5% of Commercial Metals shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
This is a summary of current ratings and recommmendations for Ternium and Commercial Metals, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Ternium presently has a consensus price target of $35.33, suggesting a potential downside of 13.42%. Commercial Metals has a consensus price target of $24.00, suggesting a potential downside of 0.17%. Given Commercial Metals’ higher possible upside, analysts plainly believe Commercial Metals is more favorable than Ternium.
Volatility and Risk
Ternium has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500. Comparatively, Commercial Metals has a beta of 1.35, indicating that its stock price is 35% more volatile than the S&P 500.
Valuation and Earnings
This table compares Ternium and Commercial Metals’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Ternium||$9.70 billion||0.84||$886.21 million||$4.51||9.05|
|Commercial Metals||$4.57 billion||0.61||$46.33 million||$0.62||38.77|
Ternium has higher revenue and earnings than Commercial Metals. Ternium is trading at a lower price-to-earnings ratio than Commercial Metals, indicating that it is currently the more affordable of the two stocks.
This table compares Ternium and Commercial Metals’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Ternium beats Commercial Metals on 11 of the 16 factors compared between the two stocks.
Ternium Company Profile
Ternium S.A., through its subsidiaries, manufactures and processes various steel products in Mexico, Argentina, Paraguay, Chile, Bolivia, Uruguay, Brazil, the United States, Colombia, Guatemala, Costa Rica, Honduras, El Salvador, and Nicaragua. It operates in two segments, Steel and Mining. The Steel segment offers steel products, including slabs, billets and round bars, hot-rolled coils and sheets, bars and stirrups, wire rods, cold-rolled coils and sheets, tin plates, hot dipped galvanized and electrogalvanized sheets and pre-painted sheets, steel pipes and tubular products, beams, and roll formed products, as well as other products, such as pig iron. It also produces and sells electricity to electric grids. The Mining segment sells iron ore concentrates and pellets. The company serves various companies and small businesses operating in the automotive, home appliance, construction, capital goods, container, food, and energy industries. Ternium S.A. was founded in 1961 and is based in Luxembourg City, Luxembourg. Ternium S.A. is a subsidiary of Techint Holdings S.à r.l.
Commercial Metals Company Profile
Commercial Metals Company manufactures, recycles, and markets steel and metal products, and related materials and services in the United States and internationally. It operates through five segments: Americas Recycling, Americas Mills, Americas Fabrication, International Mill, and International Marketing and Distribution. The Americas Recycling segment processes and sells scrap metals to steel mills and foundries, aluminum sheet and ingot manufacturers, brass and bronze ingot makers, copper refineries and mills, secondary lead smelters, specialty steel mills, high temperature alloy manufacturers, and other consumers. The Americas Mills segment manufactures finished long steel products, including reinforcing bars, merchant bars, light structural products, and other special sections, as well as semi-finished billets for re-rolling and forging applications. This segment sells its products to construction, service center, transportation, steel warehousing, fabrication, energy, petrochemical, and original equipment manufacturing industries. The Americas Fabrication segment offers fabricated steel products for use in the construction of commercial and non-commercial buildings, hospitals, convention centers, industrial plants, power plants, highways, bridges, arenas, stadiums, and dams. The International Mill segment manufactures rebars, merchant bars, and wire rods, as well as semi-finished billets; and sells fabricated rebars, fabricated meshes, assembled rebar cages, and other rebar by-products. This segment sells its products to fabricators, manufacturers, distributors, and construction companies. The International Marketing and Distribution segment processes, sells, and distributes steel products, ferrous and nonferrous metals, and other industrial products to manufacturers in the steel, nonferrous metals, metal fabrication, chemical, refractory, construction, and transportation industries. The company was founded in 1915 and is headquartered in Irving, Texas.
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