On Feb 26, we issued an updated research report on Beacon Roofing Supply, Inc. (BECN - Free Report) . The company is poised to gain from the tax reform, favorable pricing trends and a likely stronger demand contribution from hurricanes. Further, the acquisition of Allied Building Products will reinforce its roofing supplies business.
U.S. Tax Reform to Aid Beacon Roofing’s Earnings
In fiscal 2018, Beacon Roofing is poised to benefit from the tax reform. The company estimates that changes to the U.S. federal rate will reduce its long-term effective tax rate from the range of 38-39% to the range of 26-27%. The tax savings will be utilized to further improve the company’s balance sheet, pursue additional growth avenues and invest in core business. Considering these factors, Beacon Roofing increased its adjusted EPS guidance for the fiscal to the range of $3.40-$3.70. This new range is 45 cents above the prior outlook, primarily reflecting the impact of the tax reform.
Hurricane-Demand Contribution to Drive Growth
Beacon Roofing maintained its revenue outlook range of $6.6-$6.9 billion for the fiscal. The company remains optimistic about annual revenues on the back of stellar first-quarter fiscal 2018 results and a likely stronger hurricane-demand contribution. The incremental demand contributions from hurricanes Harvey and Irma will be around $40 million for the fiscal, in which about 60% of the contribution will be from Florida and the remainder from Texas.
Favorable Pricing Remains a Tailwind
On the pricing front, Beacon Roofing stated that the company’s overall pricing expanded 50-75 basis points during the fiscal first-quarter. Further, the company anticipates encouraging pricing trends in markets experiencing strong levels of demand.
Acquisition of Allied Building Products to Boost Results
Beacon Roofing’s acquisition of Allied Building Products will reinforce the former’s roofing supplies business. The buyout will also add a wallboard and acoustical ceiling-tile wholesale business to Beacon Roofing. The company has been quickly progressing toward the integration of the business, since the deal’s closure. It remains committed to achieve $110 million in cost synergies within two years of accomplishment and the early signs are very positive across all areas of savings.
Share Price Performance
Beacon Roofing has underperformed its industry with respect to price performance over the past year due to competitive pricing pressures. The stock has gained around 18%, while the industry has recorded growth of 26% during the same time frame.
Zacks Rank & Other Stocks to Consider
Beacon Roofing currently carries a Zacks Rank #2 (Buy).
Some other similarly-ranked stocks in the same sector are Asbury Automotive Group, Inc. (ABG - Free Report) , Fastenal Company (FAST - Free Report) and Lowe's Companies, Inc. (LOW - Free Report) . All three stocks carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Asbury Automotive has a long-term earnings growth rate of 10.8%. Its shares have rallied 35.9%, over the past six months.
Fastenal Company has a long-term earnings growth rate of 14%. The company’s shares have been up 34.8% during the same time frame.
Lowe's has a long-term earnings growth rate of 18.4%. The stock has gained 32.1% in six months’ time.
Zacks Top 10 Stocks for 2018
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Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
On Feb 26, we issued an updated research report on Beacon Roofing Supply, Inc. (BECN - Free Report) . The company is poised to gain from the tax reform, favorable pricing trends and a likely stronger demand contribution from hurricanes. Further, the acquisition of Allied Building Products will reinforce its roofing supplies business.
U.S. Tax Reform to Aid Beacon Roofing’s Earnings
In fiscal 2018, Beacon Roofing is poised to benefit from the tax reform. The company estimates that changes to the U.S. federal rate will reduce its long-term effective tax rate from the range of 38-39% to the range of 26-27%. The tax savings will be utilized to further improve the company’s balance sheet, pursue additional growth avenues and invest in core business. Considering these factors, Beacon Roofing increased its adjusted EPS guidance for the fiscal to the range of $3.40-$3.70. This new range is 45 cents above the prior outlook, primarily reflecting the impact of the tax reform.
Hurricane-Demand Contribution to Drive Growth
Beacon Roofing maintained its revenue outlook range of $6.6-$6.9 billion for the fiscal. The company remains optimistic about annual revenues on the back of stellar first-quarter fiscal 2018 results and a likely stronger hurricane-demand contribution. The incremental demand contributions from hurricanes Harvey and Irma will be around $40 million for the fiscal, in which about 60% of the contribution will be from Florida and the remainder from Texas.
Favorable Pricing Remains a Tailwind
On the pricing front, Beacon Roofing stated that the company’s overall pricing expanded 50-75 basis points during the fiscal first-quarter. Further, the company anticipates encouraging pricing trends in markets experiencing strong levels of demand.
Acquisition of Allied Building Products to Boost Results
Beacon Roofing’s acquisition of Allied Building Products will reinforce the former’s roofing supplies business. The buyout will also add a wallboard and acoustical ceiling-tile wholesale business to Beacon Roofing. The company has been quickly progressing toward the integration of the business, since the deal’s closure. It remains committed to achieve $110 million in cost synergies within two years of accomplishment and the early signs are very positive across all areas of savings.
Share Price Performance
Beacon Roofing has underperformed its industry with respect to price performance over the past year due to competitive pricing pressures. The stock has gained around 18%, while the industry has recorded growth of 26% during the same time frame.
Zacks Rank & Other Stocks to Consider
Beacon Roofing currently carries a Zacks Rank #2 (Buy).
Some other similarly-ranked stocks in the same sector are Asbury Automotive Group, Inc. (ABG - Free Report) , Fastenal Company (FAST - Free Report) and Lowe's Companies, Inc. (LOW - Free Report) . All three stocks carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Asbury Automotive has a long-term earnings growth rate of 10.8%. Its shares have rallied 35.9%, over the past six months.
Fastenal Company has a long-term earnings growth rate of 14%. The company’s shares have been up 34.8% during the same time frame.
Lowe's has a long-term earnings growth rate of 18.4%. The stock has gained 32.1% in six months’ time.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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