It has been about a month since the last earnings report for Gibraltar Industries (ROCK Quick QuoteROCK - Free Report) . Shares have lost about 9.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Gibraltar Q2 Earnings Beat Estimates, Margin Rise

Gibraltar Industries, Inc. reported impressive results in second-quarter 2022. Earnings and net sales surpassed the Zacks Consensus Estimate and increased on a year-over-year basis, backed by a strong residential segment.

Chairman and CEO of ROCK, Bill Bosway, stated, “Part of our ongoing strategy is to further simplify and digitize our businesses, and we completed two additional ERP implementations during the quarter; these systems are designed to enable us to better connect with and provide seamless value to our customers while increasing speed, flexibility, and efficiency of our operations. Demand drivers remain solid for the overall business despite our Renewables’ customers waiting for clarity on panel availability to execute orders and finalize projects.”

Inside the Headlines

Gibraltar reported adjusted earnings of 96 cents per share, which topped the Zacks Consensus Estimate of 83 cents by 15.7% and increased 18.5% year over year. Quarterly net sales of $366.9 million topped the consensus mark of $366 million by 0.3% and increased 5.3% from the prior year’s levels. On an adjusted basis, the top line increased 6.8% year over year to $364.2 million. The upside was driven by participation gains and price management in the Residential segment, partially offset by continued supply chain woes and project delays in the Agtech and Renewables segments.

The order backlog was $408 million, up 5% year over year. The upside can be attributed to robust end-market demand and new order activity across the business.

Segmental Details

Renewable Energy: Net sales in the segment decreased 5.8% from the year-ago quarter’s levels to $101.5 million. The decline was due to dynamic solar project schedules. Backlog was down 2.1% year over year as new bookings slowed pending visibility on these key trade issues. Adjusted operating margins contracted 430 basis points (bps) year over year to 7% but improved more than 1,200 bps sequentially. Gibraltar expects sequential margin improvement in the second half of 2022. Adjusted EBITDA margin contracted 420 bps from the prior-year quarter’s levels to 9.3%.

Residential Products: Net sales in the segment increased 21.9% year over year to $200.2 million, marking the eighth consecutive quarter of double-digit growth. The uptick can be attributed to price management and participation gains. Adjusted operating margins of 18.5% improved 190 bps in the quarter, thanks to price/cost management, supply chain initiatives, labor management, and additional 80/20 initiatives. Adjusted EBITDA margin improved 150 bps from the prior-year quarter’s levels to 19.6%.

Agtech: Sales declined 18.6% year over year to $43.7 million and adjusted sales fell 11.9% to $40.9 million. The downside was due to the shift of the Produce and Cannabis project into the third and fourth quarters of 2022. Backlogs were up 30% from the year-ago quarter’s levels, backed by strong quote activity and new order bookings. Adjusted operating margins improved 80 bps year over year to 6.7%. Adjusted EBITDA margin was up 100 bps year over year to 9.4%.

Infrastructure: Sales in the segment fell 5.3% year over year to $21.5 million. Although order backlog remained flat year over year, bidding activity continued to be very strong and new bookings accelerated early in the third quarter. The company expects the infrastructure bill to have a positive impact later in the second half of 2022.

Adjusted operating margins dropped 500 bps year over year due to unfavorable product mix but rose 690 bps to 13.4% sequentially, as the business overcomes steel inflation. Margins will likely improve in the rest of 2022 with lower margin projects subsiding, business mix improving, and volume leverage. Adjusted EBITDA margin contracted 460 bps from the prior-year quarter’s tally to 17.3%.

Costs & Margins

In the reported quarter, selling, general and administrative expenses increased 1.2% year over year to $50.1 million. As a percentage of sales, the metric improved 50 bps year over year to 13.7%. Adjusted operating margin expanded 130 bps year over year to 11.8%. Adjusted EBITDA margin also improved 110 bps from the prior year to 14.2%.

Balance Sheet & Cash Flow

As of Jun 30, 2022, Gibraltar had cash and cash equivalents worth $17.1 million compared with $12.8 million at the 2021-end. Long-term debt was $93.5 million, down from $23.8 million a year ago. In first-half 2022, net cash provided by operating activities totaled $0.54 million compared with $10.78 million in the previous year.

2022 Guidance Maintained

Gibraltar expects revenues to be $1.38-$1.43 billion, suggesting year-over-year growth of 3-6.7%. Adjusted earnings are likely to be in the range of $3.20-$3.40 per share, indicating a 15.1-22.3% year-over-year rise.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, Gibraltar Industries has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Gibraltar Industries has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.