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Beacon Roofing (BECN) Q1 Earnings Meet Estimates, Sales Lag
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Beacon Roofing Supply, Inc. (BECN - Free Report) reported adjusted earnings of 44 cents per share for first-quarter fiscal 2017, in line with the Zacks Consensus Estimate. Earnings increased 7% on a year-over-year basis.
Strong volume growth within residential roofing and significant improvement in gross margins were partially offset by decline in non-residential roofing sales and higher expenses that were impacted by the proportionately higher costs to serve residential customers.
Including acquisition-related items, the company reported a profit of 33 cents per share in the quarter compared with 12 cents in the prior-year quarter.
This distributor of residential and non-residential roofing materials posted record sales of $1.002 billion, exhibiting a 2.6% year-over-year rise. Revenues also beat the Zacks Consensus Estimate of $999.66 million and also marked the third consecutive quarter of sales exceeding $1 billion. The revenue growth included acquisition growth of approximately $44 million while organic sales were flat during the quarter. Residential roofing product sales increased 7%, while non-residential roofing product sales dropped 10%. Complementary product sales were up 19.8%. Organic sales inched up 2.4% for the quarter.
Cost of goods sold increased 1% to $751 million. Gross profit was $251 million, up 8% from $233 million in the year-ago quarter. Gross margin expanded 117 basis points (bps) to 25.1%.
Operating expenses for the quarter declined 1% year over year to $204 million. Operating income in the quarter was $47 million, compared with $27 million in the prior-year quarter.
Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise
Beacon Roofing reported cash and cash equivalents of $73.3 million as of Dec 31, 2016, compared with $32.2 million as of Dec 31, 2015. The company generated $78.1 million in cash from operating activities for fiscal 2016 compared with $44.7 million in the prior fiscal.
2017 Outlook
The company expects more normalized weather conditions to benefit the latter half of the year. The company continues to focus on its growth strategy in 2017 including integrating the three acquisitions made in December and January that added nine branches, including seven in the Pacific Northwest. Further, the company will maintain its focus on sales growth, gross margin stability, improved operating leverage and will also help maintain earnings.
Beacon Roofing is targeting five to 10 total openings for fiscal 2017. Along with its branch opening strategy, the company will also focus on potential acquisitions.
For fiscal 2017, the company maintained its total revenue growth range of 3–7% for 2017, which assumes 2% to 5% organic and 1% to 2% incremental contribution from acquisitions. The company anticipates adjusted earnings per share to be around $2.33.
Beacon Roofing has outperformed the Zacks categorized Building Products- Retail/Wholesale sub industry in the past one year. The stock has gained 9.0% compared with the 8.8% rise recorded by the industry over the same time frame.
Zacks Rank & Other Key Picks
Beacon Roofing currently carries a Zacks Rank #2 (Buy). Some other favourably placed stocks worth considering in the sector include Insight Enterprises Inc. (NSIT - Free Report) , Bob Evans Farms, Inc. and Rush Enterprises, Inc. (RUSHA - Free Report) . Insight Enterprises has delivered an average positive earnings surprise of 4.08% in the past four quarters and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bob Evans Farms also boasts a Zacks Rank #1 and has delivered an average positive earnings surprise of 14.74% in the trailing four quarters. Rush Enterprises, another Zacks Rank #1 stock, has an average positive earnings surprise of 6.13% in the past four quarters.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>.
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Beacon Roofing (BECN) Q1 Earnings Meet Estimates, Sales Lag
Beacon Roofing Supply, Inc. (BECN - Free Report) reported adjusted earnings of 44 cents per share for first-quarter fiscal 2017, in line with the Zacks Consensus Estimate. Earnings increased 7% on a year-over-year basis.
Strong volume growth within residential roofing and significant improvement in gross margins were partially offset by decline in non-residential roofing sales and higher expenses that were impacted by the proportionately higher costs to serve residential customers.
Including acquisition-related items, the company reported a profit of 33 cents per share in the quarter compared with 12 cents in the prior-year quarter.
Operational Update
This distributor of residential and non-residential roofing materials posted record sales of $1.002 billion, exhibiting a 2.6% year-over-year rise. Revenues also beat the Zacks Consensus Estimate of $999.66 million and also marked the third consecutive quarter of sales exceeding $1 billion. The revenue growth included acquisition growth of approximately $44 million while organic sales were flat during the quarter. Residential roofing product sales increased 7%, while non-residential roofing product sales dropped 10%. Complementary product sales were up 19.8%. Organic sales inched up 2.4% for the quarter.
Cost of goods sold increased 1% to $751 million. Gross profit was $251 million, up 8% from $233 million in the year-ago quarter. Gross margin expanded 117 basis points (bps) to 25.1%.
Operating expenses for the quarter declined 1% year over year to $204 million. Operating income in the quarter was $47 million, compared with $27 million in the prior-year quarter.
Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise
Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise | Beacon Roofing Supply, Inc. Quote
Financials
Beacon Roofing reported cash and cash equivalents of $73.3 million as of Dec 31, 2016, compared with $32.2 million as of Dec 31, 2015. The company generated $78.1 million in cash from operating activities for fiscal 2016 compared with $44.7 million in the prior fiscal.
2017 Outlook
The company expects more normalized weather conditions to benefit the latter half of the year. The company continues to focus on its growth strategy in 2017 including integrating the three acquisitions made in December and January that added nine branches, including seven in the Pacific Northwest. Further, the company will maintain its focus on sales growth, gross margin stability, improved operating leverage and will also help maintain earnings.
Beacon Roofing is targeting five to 10 total openings for fiscal 2017. Along with its branch opening strategy, the company will also focus on potential acquisitions.
For fiscal 2017, the company maintained its total revenue growth range of 3–7% for 2017, which assumes 2% to 5% organic and 1% to 2% incremental contribution from acquisitions. The company anticipates adjusted earnings per share to be around $2.33.
Beacon Roofing has outperformed the Zacks categorized Building Products- Retail/Wholesale sub industry in the past one year. The stock has gained 9.0% compared with the 8.8% rise recorded by the industry over the same time frame.
Zacks Rank & Other Key Picks
Beacon Roofing currently carries a Zacks Rank #2 (Buy). Some other favourably placed stocks worth considering in the sector include Insight Enterprises Inc. (NSIT - Free Report) , Bob Evans Farms, Inc. and Rush Enterprises, Inc. (RUSHA - Free Report) . Insight Enterprises has delivered an average positive earnings surprise of 4.08% in the past four quarters and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bob Evans Farms also boasts a Zacks Rank #1 and has delivered an average positive earnings surprise of 14.74% in the trailing four quarters. Rush Enterprises, another Zacks Rank #1 stock, has an average positive earnings surprise of 6.13% in the past four quarters.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>.