Gibraltar Industries, Inc.

Gibraltar Industries increased sales by 6% in the second quarter despite weakness in its key markets: housing and autos. The company has surprised on estimates 4 consecutive quarters by an average of 62.29%. Gibraltar has a forward P/E of 13.62.

Company Description

Gibraltar Industries, Inc. (ROCK - Snapshot Report) manufactures products for the building, industrial and automobile markets. It operates 73 facilities in 27 states, Canada, China, England, Germany and Poland and services customers in all 50 states and worldwide.

The company has two segments: Building Products and Processed Metal Products. The Building Products segment manufactures, among other things, ventilation products, masonry and storm and hurricane panels. The company is also the largest manufacturer of mailboxes in North America.

The Processed Metal Products segment includes flat-rolled products operations, non-ferrous metal powders, and just-in-time materials management.

Gibraltar's goal is to achieve $2 billion in annual sales, with net income of $120 million, by 2010.

Gibraltar Easily Beat Second Quarter Estimates by 71.79%

On Aug 7, Gibraltar reported second quarter earnings that surprised on estimates by 28 cents per share. Net income jumped 56% to $20.3 million, or 67 cents per share, from $13 million, or 43 cents per share, in the same period a year ago. Analysts expected only 39 cents per share.

Sales rose 6% to $379 million from $356 million in the second quarter of 2007. The company attributed its sales growth in weak market conditions to its 2007 acquisitions, which added sales of $22 million in the second quarter.

The company's strategy to thrive despite its two big markets, home building and autos, significantly slowing, is to consolidate and streamline its operations. In the last 18 months, ROCK has closed or consolidated 18 facilities, including 4 in the second quarter.

ROCK Raises Guidance for the Full Year

The company expects normal seasonal slowing in the second half of 2008 but still increased its full year guidance to the range of $1.50 to $1.65 per share from $1.05 to $1.25 per share due to the strong first half of the year and momentum from operational improvements. ROCK earned $1.03 in 2007.

Consensus Estimates Rise Sharply

Given the bullish quarter and the higher full year guidance forecast, it's not surprising that covering analysts have been raising estimates for the third quarter and the year. Third quarter estimates jumped 42% to 51 cents from 36 cents in the last 30 days.

For the year, estimates moved in-line with the company's guidance range, climbing 46% to $1.63 from $1.16 per share which is at the higher end of Gibraltar's guidance range.

Value Fundamentals

Gibraltar has solid value characteristics. Its forward P/E is 13.62 and the price-to-book is 1.11. As an added bonus, ROCK also pays a dividend with a current yield of 0.90%.