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Aggressive Growth

Earnings estimates for Gibraltar Industries, Inc. (ROCK - Analyst Report) have trended higher since this building products company expanded its portfolio with three acquisitions in three key U.S. markets. The company also released encouraging preliminary numbers for the upcoming quarter, which will be announced in late February.

With a recovering housing market, strong product portfolio, expansion opportunities and a bright outlook, this Zacks Rank #1 (Strong Buy) stock offers an attractive investment opportunity.

Acquisition Update and Favorable Preliminary Results

On Jan 15, Gibraltar Industries announced that it boosted its portfolio and expanded its customer base with the acquisition of assets from three businesses. The acquisitions were made between Nov 14 and Dec 28, 2012. They have strengthened ROCK’s position in three key U.S. markets, namely (1) sun protection products for new residential construction and home remodeling; (2) function-critical components for public infrastructure construction and maintenance; and (3) perforated metal products for industrial and automotive applications.

Following the acquisitions, Gibraltar Industries is now confident of reporting strong fourth quarter results, scheduled for Feb 22, 2013. The company expects adjusted earnings per share between 1 cent and 5 cents, compared to the prior-year loss of 17 cents. Sales are expected between $171 million and $173 million, compared with $174 million in the fourth quarter of 2011. The company expects adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the range of $13 million to $14 million, versus $3 million in the prior-year quarter.

Adjusted earnings are expected between 62 cents and 66 cents for 2012, significantly higher than the 50 cents reported in the prior-year. The company projects sales of $788 million to $790 million, up approximately 3% from 2011. Adjusted EBITDA for the year is expected at $78 million to $80 million, a 3% to 5% increase.

The Zacks Consensus Estimate for the fourth quarter stands at 3 cents per share, up 114.7% from the prior year quarter. For 2012, the Zacks Consensus Estimate is 63 cents per share, up 35.1%.

Surge in Earnings Estimates

Over the past 60 days, the Zacks Consensus Estimate for 2012 has gone up 8.6% to 63 cents per share, reflecting year-over-year growth of 35.1%. The Zacks Consensus Estimate for 2013 is up 12.2% to 92 cents per share over the same timeframe, suggesting year-over-year growth of 44.1%.

Valuation

Gibraltar Industries currently trades at a forward price to earnings (P/E) ratio of 18.7, reflecting a premium of 43.9% to the peer group average of 13.0. Similarly, it currently trades at a price-to-sales (P/S) multiple of 0.66, reflecting a 73.7% premium to the peer group average of 0.38. However, given the company's compelling fundamentals, the premium is justified. The P/B multiple for both the stock and the peer group average stands at 1.1.

Shares of Gibraltar Industries have been rising sharply since mid-Nov 2012, following its strong third quarter results and the acquisitions. The stock is currently trading above its 50- and 200-day moving averages, which stand at $14.63 and $12.35, respectively. In fact, the stock has consistently traded above its 50- and 200-day moving averages since late-November. Volume averages roughly 92K daily.

Based in Buffalo, New York, Gibraltar Industries, Inc. is a manufacturer, processor and distributor of residential and commercial building products and processed metal products for the building and construction, industrial, and automotive markets. The company serves customers across North America and Europe. The market cap of the company is $518.1 million.

Other stocks in the basic material sector worth considering are Posco (PKX) with a Zacks Rank #1 (Strong Buy) and Commercial Metals Co. (CMC) with a Zacks Rank #2 (Buy).

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