Eagle Materials

Company Description

Eagle Materials Inc. produces building materials and construction products used in residential, industrial and commercial construction. Products include Cement, Gypsum Wallboard, Recycled Paperboard, and Concrete and Aggregates. These products are used primarily in commercial and residential construction, public construction projects, and projects to build, expand, and repair roads and highways. The company, formerly known as Centex Construction Products, Inc., was founded in 1963 and is based in Dallas, Texas.

Eagle Materials Beat In Three of the Last Five Quarters

Eagle Materials has topped earnings estimates in three of the last five quarters. Over the course of those three beats, the company has topped the Zacks Consensus Estimate by an average of $0.05, and the percent beat averages out to be 68%. Those are some heavy duty beats! The stock, however, has only moved higher following one of the positive earnings surprises.

In the September 2011 quarter, the stock rose 10.8% following a 17% miss on the bottom line. The company reported earnings of $0.14, $0.03 less than the Zacks Consensus Estimate and were lower than year ago levels. Revenues of $135 million were $3 million less than the Zacks Consensus Estimate but did show an increase of $3 million from the year ago period.

Eagle Materials Most Recent Reported Earnings

On February 2, 2012 Eagle Materials reported revenue of $124 million, roughly $11 million ahead of the Zacks Consensus Estimate and up from $104 million reported in year ago quarter. In addition, earnings per share came in at $0.20, $0.08 higher than the Zacks Consensus Estimate of $0.12. The beat of 66% helped to propel the stock higher by 10.5% in the session following the release.

Eagle Materials Expected to Report Earnings

Eagle Materials is expected to report earnings on May 16, 2012. The Zacks Consensus Estimate is calling for revenue of $116 million and EPS of $0.23. The year ago period saw revenue of $95 million and EPS of $0.00, or a break even quarter. Following the release last year, the stock moved lower by 2.8%.

Eagle Materials Sees Estimates Moving Higher

Eagle Materials has seen earnings estimates for 2012 move higher in five of the last six months. Starting at $0.81 in December 2011, analysts have increased estimates to $0.89 in January 2012 and then huge jump to $1.31 in February. March saw another slight bump up to $1.35 and April also saw an increase to $1.43. That is an increase of more than 76%. Aggressive growth investors look for earnings growth like this, but rarely find it.

Valuation

The valuation for Eagle Materials has the stock trading at 26x forward earnings compared to the industry average of 27x. The price to book multiple of 3.6x is well above the 1.7x industry average and the price to sales multiple also sees similar premium of 3.5x compared to 1.5x for the industry average.

The Chart

The price and consensus chart shows us that the company had a challenging three years from 2009 to 2011. Estimates started high in each of those years and finished lower. Lower estimates almost always lead to lower stock prices and that is exactly what happened to Eagle Materials. The company was able to turn that story around and earnings estimates for 2012 and 2013 have moved dramatically higher.

Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service

Follow Brian Bolan on twitter at @BBolan1