A month has gone by since the last earnings report for Gibraltar Industries (ROCK - Free Report) . Shares have lost about 0.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Gibraltar Industries due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Gibraltar Q2 Earnings & Revenues Beat Estimates, Up Y/Y
Gibraltar Industries, Inc. reported better-than-expected results for second-quarter 2020. The company’s earnings and sales not only topped analysts’ expectations but also improved year over year on persistent strength across the business, particularly in the Renewable Energy & Conservation and Residential Products units.
Inside the Headlines
Gibraltar reported adjusted earnings of 84 cents per share, which handily topped the Zacks Consensus Estimate of 40 cents by 110%. The bottom line increased 15.1% year over year, supported by growth in Renewable Energy & Conservation, as well as Residential Products segments.
Net sales surpassed the consensus mark by 25.7% and increased 8.8% year over year to $285.8 million, owing to 1.6% organic growth driven by its Renewable Energy & Conservation segment. Acquisitions contributed 7.2% to top-line growth.
The company’s backlog was $277 million (at quarter-end), up 14% year over year owing to increased participation in Renewable Energy and Conservation, as well as Residential Products.
Residential Products: Net sales in the segment grew 7% from the year-ago period to $139.5 million for the quarter. The upside was mainly due to solid repair and remodel activity. Adjusted operating margins improved 400 basis points (bps) to 20.2%. Strong execution, product mix, improved material cost alignment and 80/20 simplification initiatives aided the margins.
Industrial and Infrastructure Products: Sales in the segment decreased 14.4% year over year to $48.1 million owing to lower demand for core industrial products during the pandemic. Nonetheless, adjusted operating margins expanded 490 bps to 14.5%, backed by a more favorable mix of higher-margin products and solid execution of 80/20 profit improvement efforts.
Renewable Energy and Conservation: Quarterly net sales in the segment rose 29.3% year over year (4.2% on an organic basis) to $98.3 million. Apeks Supercritical, Thermo Energy Solutions and Delta Separations acquisitions contributed 25.1% to top-line growth. The uptick can be attributed to core business strength, driven by participation gains, volume leverage, productivity improvements and favorable price/material cost alignment. Segment backlog grew 18% year over year owing to healthy market dynamics, participation gains and the recent acquisitions. However, adjusted operating margins of 10.9% in the segment were down 170 bps.
Costs & Margin
Selling, general and administrative expenses increased 1.9% year over year to $37.7 million. As a percentage of sales, the metric decreased 90 bps year over year to 13.2%. Adjusted operating margin of 12.9% expanded 130 bps year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2020, Gibraltar had cash and cash equivalents worth $120.9 million compared with $191.4 million at 2019-end. The company used $7.3 million cash in operations for the first six months of 2020 versus $6.5 million cash provided by operating activities a year ago.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 19.88% due to these changes.
At this time, Gibraltar Industries has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Gibraltar Industries has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.