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Beacon Roofing Buys BJ Supply, Expands in Philadelphia

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Beacon Roofing Supply (BECN - Free Report) has acquired BJ Supply that will complement Beacon’s strong presence in Philadelphia, PA along with its surrounding suburban counties and New Jersey. Operating for more than three decades, BJ Supply is a distributor of roofing and related building products primarily catering to the busy Northeast Philadelphia market.

This is in sync with the company’s strategy to grow through strategic acquisitions and diversification of its product offering. During its fourth-quarter fiscal 2016 conference call, Beacon Roofing had stated that it will remain aggressive on the M&A front, as well as fund its internal growth initiatives while striving to reach its 2018 targeted leverage ratio.

Starting with the successful acquisition of RSG, Beacon Roofing has completed and integrated seven other acquisitions through fiscal 2016. The company exceeded its synergy realization target from the RSG acquisition. The initial estimate at the time of completion of the deal was $30 million which was subsequently revised upward to $35 million. Beacon Roofing achieved approximately $40 million in cost benefits for the year, and targets $55 million in savings through 2017. Excluding the RSG transaction, these other seven deals have added annual revenues of approximately $200 million. These deals have enabled the company to expand its reach in geographies such as the Pacific Northwest, Colorado and Michigan while expanding its product diversity.
 

BEACON ROOFING Price

 

BEACON ROOFING Price | BEACON ROOFING Quote

In the fiscal fourth quarter, Beacon Roofing witnessed revenue growth of about 49%, driven by the acquisitions over fiscal 2016 and organic growth of 2.4%. For fiscal 2017, the company anticipates revenue growth in the range of 3–7%, which assumes 2–5% organic and an approximate $75 million contribution from the seven transactions completed in 2016. Beacon Roofing projects adjusted EPS in the range of $2.26 to $2.65.

Beacon Roofing’s price performance year to date reveals that it has significantly outperformed the Zacks categorized Building Products-Retail/Wholesale sub-industry’s growth. The company gained 17.0% over the said timeframe, whereas the abovementioned sub industry declined 1.2%. Its share price movement reflects the company’s record-setting performance in fiscal 2016. During the fiscal, the company not only delivered exceptional growth and increased margins, but also reduced its debt ratio and efficiently integrated the eight acquisitions.





Beacon is one of the largest distributors of residential and non-residential roofing and building products in North America. Beacon has presence in 47 U.S. states and six Canadian provinces.

Zacks Rank & Key Picks

Beacon Roofing currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the sector include Best Buy Co., Inc. (BBY - Free Report) , America's Car-Mart Inc. (CRMT - Free Report) and Insight Enterprises Inc. (NSIT - Free Report) . Best Buy has an average earnings surprise of 25.66% in the last four quarters and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

America's Car-Mart also sports a Zacks Rank #1 and has an average earnings surprise of 15.67% in the last four quarters. Insight Enterprises, another Zacks Rank #1 stock, has an average positive earnings surprise of 4.08% in the last four quarters.

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