The Zacks Building Products - Miscellaneous industry is under pressure from tariffs, rising input and labor costs and lingering inflation. Supply-chain disruptions, high energy expenses and cautious developer sentiment have slowed commercial activity, while affordability challenges persist in housing. Mortgage rates remain above 6% despite the Fed’s rate cut, keeping demand constrained as homeowners hold on to low-rate mortgages and new builds face elevated costs. These headwinds continue to compress margins and limit relief for builders and consumers alike.

Still, long-term prospects remain constructive. Federal investment in infrastructure—spanning roads, bridges, broadband, and climate-resilient projects—combined with global supply-chain reinvestment and energy transition efforts, offers a strong backdrop for growth. Companies are also driving efficiency through cost-saving initiatives, digital solutions, and acquisitions. Against this backdrop, Armstrong World Industries, Inc. (AWI Quick QuoteAWI - Free Report) , Frontdoor, Inc. (FTDR Quick QuoteFTDR - Free Report) , Arcosa, Inc. (ACA Quick QuoteACA - Free Report) and Everus Construction Group, Inc. (ECG Quick QuoteECG - Free Report) are well-positioned to capitalize on these positive trends.

Industry Description

The Zacks Building Products - Miscellaneous industry primarily comprises manufacturers, designers and distributors of home improvement and building products like ceiling systems, doors, windows, flooring and metal products. Some industry players provide solutions to rehabilitate the aging infrastructure, primarily pipelines in the wastewater, water, energy, mining and refining industries. The companies also manufacture expansion joints and structural bearings, ventilation products, ground-mounted solar racking and commercial greenhouses, as well as mail storage (solutions including mailboxes along with package delivery products). Companies in this industrial cohort also rent out equipment to a diverse customer base, including construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities.

3 Trends Shaping the Future of the Building Products Industry

Tariff Impact: The U.S. administration’s tariff policies are reshaping the U.S. building products industry by increasing costs, disrupting supply chains and influencing consumer behavior. While these policies aim to bolster domestic manufacturing, the immediate effects include heightened inflation and challenges for builders and consumers alike. Persistent uncertainty around tariffs, inflation, labor availability and interest rates is expected to slow commercial construction activity, particularly in more discretionary renovation projects. While ground-level bidding activity has remained relatively stable, first-time bidding for new projects has softened, reflecting hesitation among developers amid economic volatility. Input cost inflation, especially in energy and raw materials, remains a headwind.

Rising Costs & Soft Residential Market: Inflationary headwinds with respect to transportation costs, material costs and energy costs have been a pressing concern. Also, rising labor costs are compressing margins. These are dampening the companies’ operating performance. Although the industry participants have been working to recover higher costs through various price increases, they expect this ongoing volatility in material and transportation costs to be a concern. Apart from higher raw material costs, the companies bear expenses related to product launches. If companies are unable to offset these costs through price increases or supply-chain initiatives, their profits may be affected.

The industry's outlook is closely tied to the U.S. housing and renovation markets. The residential real estate market has been facing several challenges, including elevated rates, which make it difficult for buyers to secure affordable mortgages. Despite the Fed’s recent rate cut, the U.S. housing market remains strained by affordability and supply challenges. Mortgage rates have not fallen in step with the policy move, staying above 6%, which limits relief for buyers. Meanwhile, supply remains constrained as many homeowners are unwilling to give up their low-rate mortgages, while elevated construction costs hinder new builds. This shortage sustains competition and keeps prices high. Coupled with stricter lending standards, persistent inflation, and broader economic uncertainty, the recent rate cut provides little relief, leaving the deeper structural challenges to housing demand and affordability unresolved.

Infrastructural Push & Operational Excellence, Product Innovation & Acquisitions: The industry players are expected to benefit from strong global trends in infrastructure modernization, energy transition, national security and a potential super-cycle in global supply-chain investments. The U.S. administration’s endeavor to rebuild the nation’s deteriorating roads and bridges and fund new climate-resilient and broadband initiatives is expected to aid the companies.

Meanwhile, the industry participants have been undertaking strong cost-saving initiatives like business consolidation, system implementations, plant/branch closures, improvement in the global supply chain and headcount reductions to boost profitability. Industry participants have also been strategically investing in new products, sales and support services, digitally enabled solutions and advanced manufacturing capabilities to boost revenues. The companies are also following a systematic acquisition strategy to supplement organic growth and expand access to additional markets and products.

Zacks Industry Rank Indicates Dull Prospects

The Zacks Building Products – Miscellaneous industry is a 33-stock group within the broader Zacks Construction sector. The industry currently carries a Zacks Industry Rank #157, which places it in the bottom 35% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a lower earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential. Since July 2025, the industry’s earnings estimates for 2025 have decreased to $4.20 per share from $4.25.

Despite the industry’s blurred near-term view, we will present a few stocks that one may consider adding to their portfolio. Before that, it’s worth taking a look at the industry’s shareholder returns and current valuation.

Industry Lags S&P 500 & Sector

The Zacks Building Products – Miscellaneous industry has underperformed the Zacks S&P 500 Composite and the broader Zacks Construction sector over the past year.

Over this period, the industry has lost 8%, below the broader sector’s 4% decrease. Meanwhile, the Zacks S&P 500 Composite has gained 18.4% over the same period.

One-Year Price Performance

Industry's Current Valuation

On the basis of the forward 12-month price to earnings, which is a commonly used multiple for valuing building products’ stocks, the industry is trading at 18.29X versus the S&P 500’s 23.53X and the sector’s 19.76X.

Over the past five years, the industry has traded as high as 18.92X, as low as 10.31X and at a median of 15.85X, as the chart below shows.

Industry’s P/E Ratio (Forward 12-Month) Versus S&P 500

 

Industry’s P/E Ratio (Forward 12-Month) Versus Sector

4 Building Product Stocks to Buy Now

We have selected four stocks from the Zacks universe of building products that have solid growth prospects.

Everus: Based in Bismarck, ND, Everus provides contracting services in the United States. Everus’ growth is supported by strong demand across multiple end markets, led by surging investment in data centers, where clients depend on ECG’s expertise to deliver complex projects. The transmission and distribution segment is also expanding, particularly in underground utility upgrades as utilities modernize aging infrastructure to meet rising power needs. Beyond this, hospitality and commercial markets are showing signs of recovery, while transportation projects add further diversification. The company’s record $3 billion backlog, up 24% year over year, provides strong visibility. Efficiency gains from prefabrication initiatives, coupled with skilled labor additions and disciplined project selection, enhance execution and margins, positioning Everus to capture long-term opportunities in infrastructure and technology-driven construction.

Everus, a Zacks Rank #1 (Strong Buy) stock, has gained 63.9% over the past year. ECG has seen an upward estimate revision for 2025 earnings to $2.94 from $2.52 per share over the past 60 days, depicting analysts’ optimism for the company’s prospects. The estimated figure indicates 4.6% year-over-year growth for 2025. The company’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 42.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price and Consensus: ECG

Armstrong: Headquartered in Lancaster, PA, this company designs, manufactures and sells ceiling and wall solutions. Armstrong’s growth is being fueled by strong execution across both its Mineral Fiber and Architectural Specialties segments. The Mineral Fiber business has been gaining from favorable average unit value growth, productivity gains and contributions from its WAVE joint venture, while the Architectural Specialties segment‘s impressive organic sales growth and strong margin expansion, supported by the integration of acquisitions like 3form and Zahner, bode well. Innovation initiatives, including the TEMPLOK energy-saving ceiling product, and digital tools such as ProjectWorks and the Kanopi e-commerce platform, are helping expand product penetration and customer reach. Coupled with disciplined cost control and efficient capital deployment, these factors are driving sustainable revenue, margin, and cash flow growth.

Armstrong, a Zacks Rank #2 (Buy) stock, has gained 46.4% over the past year. AWI’s earnings estimates have increased for 2025 earnings to $7.27 per share from $7.21 over the past 60 days. The estimated figure indicates 15.2% year-over-year growth for 2025. AWI’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, the average surprise being 9.9%.

Price and Consensus: AWI

Frontdoor: Based in Memphis, TN, Frontdoor offers home and new home structural warranties across the United States. Frontdoor’s growth is being fueled by strong execution across both warranty and non-warranty businesses. The direct-to-consumer channel has delivered four consecutive quarters of organic home warranty growth, supported by effective marketing, digital campaigns, and discount strategies that boost membership. The company’s new HVAC program is another major driver, with revenue expected to climb nearly 40% in 2025, aided by expanded financing options and growing contractor participation. Additionally, the integration of 2-10 Home Buyers Warranty is progressing ahead of schedule, providing diversification, cross-selling opportunities, and higher-than-expected cost synergies. Combined with improving retention rates, strong renewals, and technology-enabled member engagement, these initiatives are positioning Frontdoor for sustained revenue expansion despite macro headwinds.

Frontdoor, a Zacks Rank #2 stock, has gained 36.8% over the past year. FTDR’s earnings estimates have increased for 2025 earnings to $3.90 per share from $3.81 over the past 60 days. The estimated figure indicates 16.4% year-over-year growth for 2025. The company’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 66.4%. It currently holds a VGM Score of A.

Price and Consensus: FTDR

Arcosa: Based in Dallas, TX, the company delivers infrastructure products and solutions for construction, engineered structures, and transportation markets. Arcosa’s growth is being fueled by strong demand in its core segments and strategic portfolio moves. The acquisition of Stavola has been highly accretive, boosting revenues, margins and expanding the company’s aggregates and asphalt footprint. In construction products, robust pricing and volume growth, aided by infrastructure spending and resilience in industrial and multifamily markets, are driving performance despite weather headwinds. Engineered Structures continues to benefit from record utility structure backlog, long-term grid expansion and rising electrification and data center activity, while its wind tower business is positioned for renewed demand following policy clarity on tax credits. Additionally, aging barge fleets and favorable depreciation incentives are supporting transportation orders, giving Arcosa solid backlog visibility and multi-year growth momentum.

Arcosa, a Zacks Rank #2 stock, has lost 1.2% over the past year. Nonetheless, ACA’s earnings estimates have increased for 2025 earnings to $3.90 per share from $3.83 over the past 60 days. The estimated figure indicates 29.1% year-over-year growth for 2025. The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, the average surprise being 16.2%. It currently holds a VGM Score of B.

Price and Consensus: ACA