We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. By pressing "Accept All" or closing out of this banner, you accept our Privacy Policy and Terms of Service, revised from time to time, and you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties. You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why You Should Retain Beacon Stock in Your Portfolio for Now
Read MoreHide Full Article
Beacon Roofing Supply, Inc. (BECN - Free Report) is benefiting from the effective implementation of its Ambition 2025 targets and cost-reduction initiatives. The company’s emphasis on expanding through acquisitions, along with investments in digital and productivity enhancements, is expected to support its prospects.
Shares of this largest publicly traded distributor of residential and non-residential roofing materials have gained 17.6% in the past year compared with the Zacks Building Products – Retail industry’s growth of 8.7%. However, the company faces challenges from higher operating and acquisition-related expenses.
The Zacks Consensus Estimate for the company's 2025 earnings has risen to $8.23 per share from $8.19 in the past 60 days. The estimated figure depicts 13.8% growth from the prior year’s reported levels. The upward revision in earnings estimates indicates analysts’ increasing confidence in the stock.
Image Source: Zacks Investment Research
Let us delve into the factors that highlight why investors should retain this Zacks Rank #3 (Hold) stock.
What Makes the Stock Attractive?
Beacon has implemented several strategic initiatives to drive long-term growth and enhance customer experience. The company aims to expand revenues, improve margins and create value for its customers, suppliers, employees and shareholders.
The company has made significant strides through its Ambition 2025 targets, announced on Feb. 24, 2022. Since Jan. 1, 2022, the company has expanded its geographic footprint by opening 62 greenfield branches. The company has purchased 83 branches from 24 acquisitions as of Sept. 30, 2024. These greenfield and acquired branches contributed $412.7 million and $594.9 million, respectively, to net sales in the first nine months of 2024, showcasing the success of its strategic initiatives. To support these efforts, Beacon expects an investment capacity of $2.8 billion by 2025.
Beacon continues to focus its investments on improving operations, enhancing the digital platform, expanding private label offerings and refining the pricing model to drive performance and ensure long-term growth. In the third quarter of 2024, the gross margin expanded 30 basis points year over year to 26.3%. This marked the fourth consecutive third quarter with a gross margin of 26% or higher, driven by higher prices across all three business segments.
BECN focuses on enhancing productivity and advancing digital initiatives to drive growth and customer engagement. In the third quarter of 2024, digital sales increased approximately 28% year over year and 25.5% in the first nine months. Digital channels remain a competitive advantage, driving larger basket sizes and stronger customer loyalty. Beacon expects digital sales to grow about 25% annually through 2025.
Risks for Beacon Stock
The company has been experiencing higher input costs and continues to face inflationary pressures across most product categories. Despite implementing several cost-saving initiatives and price increases to offset these pressures, the risk posed by rising input costs remains significant. During the first nine months of 2024, adjusted operating expenses increased year over year to $1.38 billion from $1.2 billion reported a year ago. This upside was primarily attributable to acquired branches, as well as higher organic selling, general and administrative expenses.
Stocks to Consider
Some better-ranked stocks from the Zacks Retail-Wholesale sector are:
CMG delivered a trailing four-quarter earnings surprise of 9.8%, on average. The stock has surged 34.9% in the past year. The consensus estimate for CMG’s 2025 sales and earnings per share (EPS) indicates growth of 12.8% and 17.9%, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) presently has a Zacks Rank #2. EAT delivered a trailing four-quarter earnings surprise of 12.1%, on average. The stock has surged 237% in the past year.
The consensus estimate for EAT’s fiscal 2025 sales and EPS indicates growth of 9.3% and 44.2%, respectively, from the year-ago period’s levels.
Shake Shack Inc. (SHAK - Free Report) currently carries a Zacks Rank of 2. SHAK delivered a trailing four-quarter earnings surprise of 18.3%, on average. The stock has gained 90.5% in the past year.
The Zacks Consensus Estimate for SHAK’s 2025 sales and EPS indicates a rise of 14.7% and 42%, respectively, from the year-ago period’s levels.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report predicting the 7 stocks that will soar highest in the coming month.
Image: Bigstock
Here's Why You Should Retain Beacon Stock in Your Portfolio for Now
Beacon Roofing Supply, Inc. (BECN - Free Report) is benefiting from the effective implementation of its Ambition 2025 targets and cost-reduction initiatives. The company’s emphasis on expanding through acquisitions, along with investments in digital and productivity enhancements, is expected to support its prospects.
Shares of this largest publicly traded distributor of residential and non-residential roofing materials have gained 17.6% in the past year compared with the Zacks Building Products – Retail industry’s growth of 8.7%. However, the company faces challenges from higher operating and acquisition-related expenses.
The Zacks Consensus Estimate for the company's 2025 earnings has risen to $8.23 per share from $8.19 in the past 60 days. The estimated figure depicts 13.8% growth from the prior year’s reported levels. The upward revision in earnings estimates indicates analysts’ increasing confidence in the stock.
Image Source: Zacks Investment Research
Let us delve into the factors that highlight why investors should retain this Zacks Rank #3 (Hold) stock.
What Makes the Stock Attractive?
Beacon has implemented several strategic initiatives to drive long-term growth and enhance customer experience. The company aims to expand revenues, improve margins and create value for its customers, suppliers, employees and shareholders.
The company has made significant strides through its Ambition 2025 targets, announced on Feb. 24, 2022. Since Jan. 1, 2022, the company has expanded its geographic footprint by opening 62 greenfield branches. The company has purchased 83 branches from 24 acquisitions as of Sept. 30, 2024. These greenfield and acquired branches contributed $412.7 million and $594.9 million, respectively, to net sales in the first nine months of 2024, showcasing the success of its strategic initiatives. To support these efforts, Beacon expects an investment capacity of $2.8 billion by 2025.
Beacon continues to focus its investments on improving operations, enhancing the digital platform, expanding private label offerings and refining the pricing model to drive performance and ensure long-term growth. In the third quarter of 2024, the gross margin expanded 30 basis points year over year to 26.3%. This marked the fourth consecutive third quarter with a gross margin of 26% or higher, driven by higher prices across all three business segments.
BECN focuses on enhancing productivity and advancing digital initiatives to drive growth and customer engagement. In the third quarter of 2024, digital sales increased approximately 28% year over year and 25.5% in the first nine months. Digital channels remain a competitive advantage, driving larger basket sizes and stronger customer loyalty. Beacon expects digital sales to grow about 25% annually through 2025.
Risks for Beacon Stock
The company has been experiencing higher input costs and continues to face inflationary pressures across most product categories. Despite implementing several cost-saving initiatives and price increases to offset these pressures, the risk posed by rising input costs remains significant. During the first nine months of 2024, adjusted operating expenses increased year over year to $1.38 billion from $1.2 billion reported a year ago. This upside was primarily attributable to acquired branches, as well as higher organic selling, general and administrative expenses.
Stocks to Consider
Some better-ranked stocks from the Zacks Retail-Wholesale sector are:
Chipotle Mexican Grill, Inc. (CMG - Free Report) presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
CMG delivered a trailing four-quarter earnings surprise of 9.8%, on average. The stock has surged 34.9% in the past year. The consensus estimate for CMG’s 2025 sales and earnings per share (EPS) indicates growth of 12.8% and 17.9%, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) presently has a Zacks Rank #2. EAT delivered a trailing four-quarter earnings surprise of 12.1%, on average. The stock has surged 237% in the past year.
The consensus estimate for EAT’s fiscal 2025 sales and EPS indicates growth of 9.3% and 44.2%, respectively, from the year-ago period’s levels.
Shake Shack Inc. (SHAK - Free Report) currently carries a Zacks Rank of 2. SHAK delivered a trailing four-quarter earnings surprise of 18.3%, on average. The stock has gained 90.5% in the past year.
The Zacks Consensus Estimate for SHAK’s 2025 sales and EPS indicates a rise of 14.7% and 42%, respectively, from the year-ago period’s levels.