Back to top

Analyst Blog

On Mar 13, we maintained our Neutral recommendation on Beacon Roofing Supply, Inc. (BECN - Analyst Report), one of the three largest roofing material distributors in the United States and Canada, on the back its active acquisition pipeline, recovery in residential and non-residential construction sectors, offset by concerns regarding difficult comparisons ahead and a seasonally weak second quarter.

Why Reiterated?
Beacon Roofing’s first-quarter 2013 earnings were 37 cents per share, down 5% year over year. Revenues increased 5% to $514 million, benefiting from the positive impact of several acquisitions completed since the start of last year, offset by lower average residential roofing selling prices. 
Acquisitions are an important part of Beacon Roofing’s growth strategy. In the first quarter, Beacon acquired Ford Wholesale Co., a distributor of residential and commercial roofing and Construction Materials Supply marking its foray into the attractive North California market. Earlier, in December, the company acquired Pennsylvania-based McClure-Johnston Company. With continued improvement in core industry trends, we expect the company to aggressively pursue acquisitions in the near term.
The company continues to benefit from increased re-roofing activities. Driving the demand for re-roofing is an aging U.S. housing stock. Furthermore, weather damage, homeowners looking to upgrade their homes, and sales of existing homes are also driving demand. Furthermore, U.S. residential and non-residential construction is finally stabilizing and is on the road to a much-awaited recovery, which bodes well for the Beacon Roofing. 
On the flipside, Beacon is facing difficult comparisons as the prior-year results benefited from storm damage, particularly in residential business, which registered a 25% organic gain. The company will face similar issues in the second quarter as the residential business will be up against a 46% comparison.
Furthermore, the second quarter is typically affected adversely by winter construction cycles and cold weather patterns as the levels of activity in the new construction and re-roofing markets decrease. As many of Beacon’s expenses remain relatively fixed throughout the year, the company generally incurs a loss during the second quarter.
Other Stocks to Consider
Other stocks in the same industry with favorable Zacks rank are Lumber Liquidators Holdings, Inc. (LL - Snapshot Report), Louisiana-Pacific Corp. (LPX - Snapshot Report), which carry a Zacks Rank #1 (Strong Buy) and Plum Creek Timber Co. Inc. (PCL - Analyst Report) have a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UTD THERAPE… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%