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Beacon Roofing (BECN) Up 12.8% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Beacon Roofing Supply (BECN - Free Report) . Shares have added about 12.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Beacon Roofing due for a pullback? 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 catalysts.
Beacon Roofing Q4 Earnings & Sales Beat Estimates
Beacon Roofing reported better-than-expected results for fourth-quarter 2023. Its earnings and net sales surpassed the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis.
BECN reported net sales growth for the trailing 12 quarters, highlighting the resiliency of its business model. This is driven by diligent pricing execution, productivity, and improvements from the bottom quintile branch initiative.
In 2023, it acquired 21 branches and opened 28 greenfield locations in key markets, enhancing customer reach and service.
Earnings & Revenue Discussion
This distributor of building products reported adjusted earnings per share of $1.72, which topped the consensus mark of $1.69 by 1.8% and increased 41% from the year-ago adjusted level of $1.22 per share.
Net sales of $2.3 billion also topped the consensus mark of $2.28 billion by 1%. The top line increased 16.8% on a year-over-year basis, driven by organic volume growth, including greenfields, over the last four quarters.
Estimated organic volumes (including greenfields) and weighted-average selling price contributed approximately 12-13% and 0-1%, respectively, and acquired branches added more than 4% to net sales.
Sales According to Line of Business
Residential Roofing Product: In the reported quarter, sales of this product line (comprising 50.6% of quarterly net sales) were $1.16 billion, up 20.2% from the year-ago quarter. Higher volumes primarily drove the upside.
Non-Residential Roofing Product: Sales (comprising 27.2% of the quarterly net sales) rose 11.4% from the year-ago quarter to $626.7 million owing to underlying solid market demand.
Complementary Product: In the fourth quarter, sales of this product line (comprising 22.2% of quarterly net sales) increased 16% year over year to $510 million. The acquisition of Coastal Construction Products primarily drove the upside.
Operating Highlights
The gross margin of 25.7% was down 50 basis points (bps) year over year due to higher product costs, majorly offset by higher average selling prices of the company’s products.
Adjusted EBITDA increased 21.4% on a year-over-year basis to $216.7 million, driven by higher net sales and operating leverage. Adjusted EBITDA margin expanded 30 bps year over year to 9.4%. This marked the highest adjusted EBITDA in the company’s history.
2023 Highlights
The company reported net sales of $9.12 billion, which increased 8.2% on a year-over-year basis, driven by the contributions of acquired branches and greenfields. Residential roofing product sales increased 10.3%, and complementary product sales rose 18.6% compared with the prior year, but non-residential roofing product sales decreased 2.7% year over year.
The company reported adjusted income of $111.2 million, up from $93.2 million reported in 2022. Also, it generated adjusted EPS of $7.97 on 64.8 million diluted weighted-average common stock outstanding.
The gross margin of 25.7% was down 80 bps year over year. Adjusted EBITDA was $929.6 million compared with $910 million reported in the prior-year quarter. Adjusted EBITDA margin contracted 60 bps year over year to 10.2%.
Other Financial Details
As of Dec 31, 2023, the company had cash and cash equivalents of $84 million compared with $67.7 million at 2022-end. Long-term debt, net was $2.19 billion, up from the 2022-end value of $1.61 billion.
Net cash provided by operating activities was $787.8 million in 2023 compared with $401.1 million in the prior year.
As of 2023-end, BECN had $389.1 million available for repurchases remaining under the current Repurchase Program.
Guidance
For the first quarter of 2024, the company anticipates net sales to be up in the high single digits from the year-ago period. Gross margin is expected to be approximately 24.5% versus 25.5% a year ago. In January 2024, net sales per day were down nearly 4% year over year.
For 2024, net sales growth is anticipated to be in the mid-single digit year over year. Gross margin is expected to be in the mid-25% range. Adjusted EBITDA is expected to be in the range of $920-$980 million.
Residential shipments are likely to be down in 2024 on lower expected storm demand, partially offset by higher non-storm repair & re-reroofing. Single-family starts and new construction activity are expected to improve this year, and existing home sales are anticipated to recover from a low point. Non-residential market demand is expected to remain soft in 2024.
Continuous investments in greenfield locations are expected to yield 25 new locations in 2024.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -47.43% due to these changes.
VGM Scores
Currently, Beacon Roofing has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Beacon Roofing has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Beacon Roofing belongs to the Zacks Building Products - Retail industry. Another stock from the same industry, Home Depot (HD - Free Report) , has gained 2.2% over the past month. More than a month has passed since the company reported results for the quarter ended January 2024.
Home Depot reported revenues of $34.79 billion in the last reported quarter, representing a year-over-year change of -2.9%. EPS of $2.82 for the same period compares with $3.30 a year ago.
For the current quarter, Home Depot is expected to post earnings of $3.60 per share, indicating a change of -5.8% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.
Home Depot has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Beacon Roofing (BECN) Up 12.8% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Beacon Roofing Supply (BECN - Free Report) . Shares have added about 12.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Beacon Roofing due for a pullback? 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 catalysts.
Beacon Roofing Q4 Earnings & Sales Beat Estimates
Beacon Roofing reported better-than-expected results for fourth-quarter 2023. Its earnings and net sales surpassed the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis.
BECN reported net sales growth for the trailing 12 quarters, highlighting the resiliency of its business model. This is driven by diligent pricing execution, productivity, and improvements from the bottom quintile branch initiative.
In 2023, it acquired 21 branches and opened 28 greenfield locations in key markets, enhancing customer reach and service.
Earnings & Revenue Discussion
This distributor of building products reported adjusted earnings per share of $1.72, which topped the consensus mark of $1.69 by 1.8% and increased 41% from the year-ago adjusted level of $1.22 per share.
Net sales of $2.3 billion also topped the consensus mark of $2.28 billion by 1%. The top line increased 16.8% on a year-over-year basis, driven by organic volume growth, including greenfields, over the last four quarters.
Estimated organic volumes (including greenfields) and weighted-average selling price contributed approximately 12-13% and 0-1%, respectively, and acquired branches added more than 4% to net sales.
Sales According to Line of Business
Residential Roofing Product: In the reported quarter, sales of this product line (comprising 50.6% of quarterly net sales) were $1.16 billion, up 20.2% from the year-ago quarter. Higher volumes primarily drove the upside.
Non-Residential Roofing Product: Sales (comprising 27.2% of the quarterly net sales) rose 11.4% from the year-ago quarter to $626.7 million owing to underlying solid market demand.
Complementary Product: In the fourth quarter, sales of this product line (comprising 22.2% of quarterly net sales) increased 16% year over year to $510 million. The acquisition of Coastal Construction Products primarily drove the upside.
Operating Highlights
The gross margin of 25.7% was down 50 basis points (bps) year over year due to higher product costs, majorly offset by higher average selling prices of the company’s products.
Adjusted EBITDA increased 21.4% on a year-over-year basis to $216.7 million, driven by higher net sales and operating leverage. Adjusted EBITDA margin expanded 30 bps year over year to 9.4%. This marked the highest adjusted EBITDA in the company’s history.
2023 Highlights
The company reported net sales of $9.12 billion, which increased 8.2% on a year-over-year basis, driven by the contributions of acquired branches and greenfields. Residential roofing product sales increased 10.3%, and complementary product sales rose 18.6% compared with the prior year, but non-residential roofing product sales decreased 2.7% year over year.
The company reported adjusted income of $111.2 million, up from $93.2 million reported in 2022. Also, it generated adjusted EPS of $7.97 on 64.8 million diluted weighted-average common stock outstanding.
The gross margin of 25.7% was down 80 bps year over year. Adjusted EBITDA was $929.6 million compared with $910 million reported in the prior-year quarter. Adjusted EBITDA margin contracted 60 bps year over year to 10.2%.
Other Financial Details
As of Dec 31, 2023, the company had cash and cash equivalents of $84 million compared with $67.7 million at 2022-end. Long-term debt, net was $2.19 billion, up from the 2022-end value of $1.61 billion.
Net cash provided by operating activities was $787.8 million in 2023 compared with $401.1 million in the prior year.
As of 2023-end, BECN had $389.1 million available for repurchases remaining under the current Repurchase Program.
Guidance
For the first quarter of 2024, the company anticipates net sales to be up in the high single digits from the year-ago period. Gross margin is expected to be approximately 24.5% versus 25.5% a year ago. In January 2024, net sales per day were down nearly 4% year over year.
For 2024, net sales growth is anticipated to be in the mid-single digit year over year. Gross margin is expected to be in the mid-25% range. Adjusted EBITDA is expected to be in the range of $920-$980 million.
Residential shipments are likely to be down in 2024 on lower expected storm demand, partially offset by higher non-storm repair & re-reroofing. Single-family starts and new construction activity are expected to improve this year, and existing home sales are anticipated to recover from a low point. Non-residential market demand is expected to remain soft in 2024.
Continuous investments in greenfield locations are expected to yield 25 new locations in 2024.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -47.43% due to these changes.
VGM Scores
Currently, Beacon Roofing has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Beacon Roofing has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Beacon Roofing belongs to the Zacks Building Products - Retail industry. Another stock from the same industry, Home Depot (HD - Free Report) , has gained 2.2% over the past month. More than a month has passed since the company reported results for the quarter ended January 2024.
Home Depot reported revenues of $34.79 billion in the last reported quarter, representing a year-over-year change of -2.9%. EPS of $2.82 for the same period compares with $3.30 a year ago.
For the current quarter, Home Depot is expected to post earnings of $3.60 per share, indicating a change of -5.8% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.
Home Depot has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.