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Beacon Roofing (BECN) Up 3.4% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Beacon Roofing Supply (BECN - Free Report) . Shares have added about 3.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Beacon Roofing due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Beacon's Q4 Earnings & Revenues Beat Expectations
Beacon Roofing posted impressive fourth-quarter fiscal 2020 results. The top and bottom lines surpassed the respective Zacks Consensus Estimate, mainly backed by solid residential backdrop and stronger gross margins.
Julian Francis, Beacon’s president and chief executive officer said, “Strong execution by our team and a favorable residential backdrop drove record fourth quarter Adjusted EBITDA.”
Shares of this largest distributor of residential and non-residential roofing materials gained 18.5% over the past three months against the industry’s 5.1% decline.
Quarter in Detail
Beacon reported adjusted earnings of $1.30 per share, which topped the consensus mark of $1.02 by 27.5%. In the year-ago period, it recorded earnings of $1.04 a share. Despite low revenues, aggressive cost-cutting actions aided the bottom line. Solid residential backdrop and gross margins backed by pricing execution, mix and timing bode well.
Net sales of $2,018 million surpassed the consensus mark of $2,017 million by 0.1% but fell 0.6% year over year due to softer demand from non-residential categories and states, partially offset by solid contribution from its industry-leading digital platform that accounted for more than 10% of September sales.
Sales of residential roofing products (accounting for 48% of net sales) grew 6.2%, while non-residential roofing products (22.1%) and complementary products (29.9%) declined 11.7% and 1.5%, respectively.
Operating Highlights
Gross margin of 25.5% improved 140 basis points or bps sequentially and 120 bps year over year for the quarter. Successful implementation of price increase, timing benefits related to the same and corresponding increase in the cost of goods sold helped the company register higher margin. It also benefited from favorable product mix in the quarter as it experienced stronger sales from higher-margin residential roofing category.
As a percentage of net sales, SG&A remained flat year over year. Adjusted EBITDA grew 12.9% and adjusted EBITDA margin also expanded 120 bps year over year, reflecting strong operating cost-control measures.
Cash Position
At fiscal 2020, Beacon had cash and cash equivalents of $624.6 million, significantly up from $72.3 million at fiscal 2019-end. Long-term debt — net of current portion — was $2.5 billion, in line with the year-ago figure.
Cash provided by operating activities was $479.3 million for fiscal 2020 versus $212.7 million a year ago.
Fiscal 2020 Highlights
Net sales were down 2.3% year over year to $6,943.9 million. Residential roofing product sales grew 0.6%, non-residential roofing product sales decreased 3.4%, and complementary product sales decreased 5.3% from the prior year. Gross margin advanced 10 bps from a year ago to 24.5%. The company reported adjusted net income of $190.1 million, up from $176.2 million in 2019.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 25.51% due to these changes.
VGM Scores
Currently, Beacon Roofing has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Beacon Roofing has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Beacon Roofing (BECN) Up 3.4% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Beacon Roofing Supply (BECN - Free Report) . Shares have added about 3.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Beacon Roofing due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Beacon's Q4 Earnings & Revenues Beat Expectations
Beacon Roofing posted impressive fourth-quarter fiscal 2020 results. The top and bottom lines surpassed the respective Zacks Consensus Estimate, mainly backed by solid residential backdrop and stronger gross margins.
Julian Francis, Beacon’s president and chief executive officer said, “Strong execution by our team and a favorable residential backdrop drove record fourth quarter Adjusted EBITDA.”
Shares of this largest distributor of residential and non-residential roofing materials gained 18.5% over the past three months against the industry’s 5.1% decline.
Quarter in Detail
Beacon reported adjusted earnings of $1.30 per share, which topped the consensus mark of $1.02 by 27.5%. In the year-ago period, it recorded earnings of $1.04 a share. Despite low revenues, aggressive cost-cutting actions aided the bottom line. Solid residential backdrop and gross margins backed by pricing execution, mix and timing bode well.
Net sales of $2,018 million surpassed the consensus mark of $2,017 million by 0.1% but fell 0.6% year over year due to softer demand from non-residential categories and states, partially offset by solid contribution from its industry-leading digital platform that accounted for more than 10% of September sales.
Sales of residential roofing products (accounting for 48% of net sales) grew 6.2%, while non-residential roofing products (22.1%) and complementary products (29.9%) declined 11.7% and 1.5%, respectively.
Operating Highlights
Gross margin of 25.5% improved 140 basis points or bps sequentially and 120 bps year over year for the quarter. Successful implementation of price increase, timing benefits related to the same and corresponding increase in the cost of goods sold helped the company register higher margin. It also benefited from favorable product mix in the quarter as it experienced stronger sales from higher-margin residential roofing category.
As a percentage of net sales, SG&A remained flat year over year. Adjusted EBITDA grew 12.9% and adjusted EBITDA margin also expanded 120 bps year over year, reflecting strong operating cost-control measures.
Cash Position
At fiscal 2020, Beacon had cash and cash equivalents of $624.6 million, significantly up from $72.3 million at fiscal 2019-end. Long-term debt — net of current portion — was $2.5 billion, in line with the year-ago figure.
Cash provided by operating activities was $479.3 million for fiscal 2020 versus $212.7 million a year ago.
Fiscal 2020 Highlights
Net sales were down 2.3% year over year to $6,943.9 million. Residential roofing product sales grew 0.6%, non-residential roofing product sales decreased 3.4%, and complementary product sales decreased 5.3% from the prior year. Gross margin advanced 10 bps from a year ago to 24.5%. The company reported adjusted net income of $190.1 million, up from $176.2 million in 2019.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 25.51% due to these changes.
VGM Scores
Currently, Beacon Roofing has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Beacon Roofing has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.