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In the last reported quarter, the company’s earnings and net sales topped the Zacks Consensus Estimate by 25.9% and 4.8%, respectively. However, earnings decreased 5% and net sales dipped 1% year over year.
The Trend in Estimate Revision
The Zacks Consensus Estimate for Owens Corning’s second-quarter earnings is pegged at $3.15 per share, suggesting a 17.8% fall from the year-ago quarter’s figure of $3.83.
Earnings estimates for the said period moved up 3 cents in the past seven days, depicting analysts’ optimism over the company’s growth potential.
The consensus estimate for net sales is pegged at $2.49 billion, indicating a 4.4% decrease from the prior-year quarter’s figure.
Factors to Note
Owens Corning’s second-quarter net sales are likely to have been hurt by lower volumes in many end markets and product categories as the company’s customers retained a more cautious view on their ordering patterns.
High costs and modest currency headwinds in the Insulation and Composites businesses, as well as a lag in housing starts in the United States and a persisting market slowdown in Europe, might have ailed second-quarter earnings performance.
The company expects a moderate decline in net sales from the prior-year period and EBIT margins in the mid-teens. Our model predicts EBIT margins to be 14.8% for the quarter, down from 20% in second-quarter 2022.
Segment-wise, OC anticipates Composites’ revenues to be down in the low double digits from the previous year, thanks to lower volumes, currency woes and unfavorable impacts from the exit of the DUCS product line and the sale of the Russian operations. Also, reductions in spot pricing and price costs might have been headwinds in the quarter. Our model predicts Composite segment revenues to decline 12% year over year.
In Roofing, OC anticipates relatively lower revenues owing to the mid-single digit decline in ARMA market shipments as distributor inventory levels continue to be reset based on regional demand trends and improved product availability. Asphalt costs are expected to increase from the December 2022 low due to the paving season. Our model predicts Roofing segment revenues to decline 7.5% year over year.
Our model predicts Insulation segment revenues to be flat year over year. The company expects continued price realization and the net impact of acquisitions and divestitures to offset lower housing demand and the ongoing market slowdown in Europe.
What the Zacks Model Unveils
Our proven model conclusively predicts an earnings beat for OC this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.
Currently, OC has a Zacks Rank #1 and an Earnings ESP of +0.19%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks With Favorable Combination
Here are some other companies in the Zacks Construction sector that, according to our model, also have the right combination of elements to post an earnings beat in the quarter to be reported.
PHM’s earnings missed the consensus mark once but beat the same on the other three occasions, the average surprise being 15.6%. Earnings for the to-be-reported quarter are expected to decrease 9.5% year over year.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +2.36% and sports a Zacks Rank #1.
BCC’s earnings for the to-be-reported quarter are expected to decline 53.7%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 19%.
Installed Building Products, Inc. (IBP - Free Report) has an Earnings ESP of +2.08% and a Zacks Rank #1.
IBP’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, the average being 9%. Earnings for the to-be-reported quarter are expected to decline 8.1% year over year.
Image: Bigstock
Lower Volumes to Affect Owens Corning's (OC) Q2 Earnings
Owens Corning (OC - Free Report) is scheduled to report second-quarter 2023 results on Jul 26, before the opening bell.
In the last reported quarter, the company’s earnings and net sales topped the Zacks Consensus Estimate by 25.9% and 4.8%, respectively. However, earnings decreased 5% and net sales dipped 1% year over year.
The Trend in Estimate Revision
The Zacks Consensus Estimate for Owens Corning’s second-quarter earnings is pegged at $3.15 per share, suggesting a 17.8% fall from the year-ago quarter’s figure of $3.83.
Owens Corning Inc Price and EPS Surprise
Owens Corning Inc price-eps-surprise | Owens Corning Inc Quote
Earnings estimates for the said period moved up 3 cents in the past seven days, depicting analysts’ optimism over the company’s growth potential.
The consensus estimate for net sales is pegged at $2.49 billion, indicating a 4.4% decrease from the prior-year quarter’s figure.
Factors to Note
Owens Corning’s second-quarter net sales are likely to have been hurt by lower volumes in many end markets and product categories as the company’s customers retained a more cautious view on their ordering patterns.
High costs and modest currency headwinds in the Insulation and Composites businesses, as well as a lag in housing starts in the United States and a persisting market slowdown in Europe, might have ailed second-quarter earnings performance.
The company expects a moderate decline in net sales from the prior-year period and EBIT margins in the mid-teens. Our model predicts EBIT margins to be 14.8% for the quarter, down from 20% in second-quarter 2022.
Segment-wise, OC anticipates Composites’ revenues to be down in the low double digits from the previous year, thanks to lower volumes, currency woes and unfavorable impacts from the exit of the DUCS product line and the sale of the Russian operations. Also, reductions in spot pricing and price costs might have been headwinds in the quarter. Our model predicts Composite segment revenues to decline 12% year over year.
In Roofing, OC anticipates relatively lower revenues owing to the mid-single digit decline in ARMA market shipments as distributor inventory levels continue to be reset based on regional demand trends and improved product availability. Asphalt costs are expected to increase from the December 2022 low due to the paving season. Our model predicts Roofing segment revenues to decline 7.5% year over year.
Our model predicts Insulation segment revenues to be flat year over year. The company expects continued price realization and the net impact of acquisitions and divestitures to offset lower housing demand and the ongoing market slowdown in Europe.
What the Zacks Model Unveils
Our proven model conclusively predicts an earnings beat for OC this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.
Currently, OC has a Zacks Rank #1 and an Earnings ESP of +0.19%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks With Favorable Combination
Here are some other companies in the Zacks Construction sector that, according to our model, also have the right combination of elements to post an earnings beat in the quarter to be reported.
PulteGroup, Inc. (PHM - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
PHM’s earnings missed the consensus mark once but beat the same on the other three occasions, the average surprise being 15.6%. Earnings for the to-be-reported quarter are expected to decrease 9.5% year over year.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +2.36% and sports a Zacks Rank #1.
BCC’s earnings for the to-be-reported quarter are expected to decline 53.7%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 19%.
Installed Building Products, Inc. (IBP - Free Report) has an Earnings ESP of +2.08% and a Zacks Rank #1.
IBP’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, the average being 9%. Earnings for the to-be-reported quarter are expected to decline 8.1% year over year.