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Bull of the Day: Beacon Roofing Supply (BECN)

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Beacon Roofing Supply (BECN - Free Report) , a Zacks Rank #1 (Strong Buy) is one of the largest distributors of residential and non-residential roofing materials in the United States and Canada. It also distributes other complementary exterior building products. It operate in several states and three Canadian provinces and is a leading distributor of roofing materials in key metropolitan markets in the Northeast, Mid-Atlantic, Southeast and Southwest regions of the United States and in Eastern Canada.

Recent Earnings Results

The company recently reported Q4 17 results where it posted record sales for the second consecutive year.  Total sales rose by +9.8% YoY, with all three product lines growing in the quarter.  On a year over year basis, residential roofing product sales were up +9.3%, non-residential roofing product sales rose by +5.3%, and complementary product sales improved by +20.7%.  The recent need for roofing repair in the southern states (due to the hurricanes), and increase in both housing starts, and building permits acted as strong tailwinds for the company.  To add to the impressive results, management also reported that existing markets same day sales were up by +8.2% in the quarter.  Further management announced a 5% to 8% price increase across all product categories due to the swelling demand.  

Management’s Take

Paul Isabella, President and CEO, commented on the quarterly results, and 2018 outlook by stating, “Fiscal 2017 produced a second consecutive year of record sales, Adjusted EBITDA and Adjusted EPS. In addition, we saw robust operating cash flow generation of approximately $315 million, which is almost a threefold improvement over the prior year. We are pleased with our fourth quarter performance, and even more excited about the future, as monthly sales trends accelerated throughout the quarter and early 2018 visibility is supported by solid re-roofing trends and two meaningful storm events. Our residential roofing product line posted its 14th consecutive quarter of sales growth and remained our strongest performing sector. Overall sales growth was very balanced among our three categories as commercial roofing produced positive growth with a mid-single digit increase.”

Price and Earnings Consensus Chart

As you can see in the chart below, the impressive earnings data, and expected continuation of the roofing demand to stay elevated in 2018, caused both the stock price and future earnings estimates to increase in the second half of 2017.

Beacon Roofing Supply, Inc. Price and Consensus

Beacon Roofing Supply, Inc. Price and Consensus | Beacon Roofing Supply, Inc. Quote.

As one would expect, analysts have increased their earnings expectations for Q1 18, Q2 18, FY 18 and FY 19 since the earnings report.  Q1 18 improved from $0.51 to $0.53, Q2 18 rose from $-0.01 to $0.00, FY 18 jumped from $2.64 to $3.08, and FY 19 was lifted from $3.27 to $3.83.

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