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Bear Of The Day: Eagle Materials (EXP)

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The Bear of the Day is an article that is supposed to highlight why a stock is a Zacks Rank #5 (Strong Sell) or maybe a Zacks Rank #4 (Sell).

Eagle Materials (EXP - Free Report) recently reported an in-line quarter and was also upgraded from hold to buy at two brokerages, so why is it a Zacks Rank #5 (Strong Sell)?

Recent Report

The most recent earnings report for EXP came on July 31, when the company met the Wall Street estimate with earnings of $1.17 per share. Revenue growth of 21% over the prior was good, but the $366M number was below the $369M estimate.

As noted the stock received a few upgrades, one was from Citigroup and the other was from Standpoint Research

So Why Zacks Rank #5 (Strong Sell)?

The Zacks Rank focuses on earnings estimates and the best place to look at the recent history of earnings estimates this page ( the detailed estimates page.

Over the last 7, 30 and 60 days, there have been multiple negative estimate revisions for EXP.  In that same time horizon, there were no positive earnings estimate revisions.

7 days ago, the current quarter was looking at $1.62, but now that number has slipped to $1.56.  The estimate for the following quarter has also slipped and both of those revisions lower have taken a toll on the current year estimate which is down to $5.32 from $5.43.

Next Year

While those few pennies here and there sting, the real pain is in the revision for next year.  The analysts materially changed their outlook on this stock and we see estimates for Fiscal 2019 have fallen from $8.20 to $6.82.  That is a huge move lower and easily the biggest reason for the stock to be a Zack Rank #5 (Strong Sell).




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