A month has gone by since the last earnings report for Gibraltar Industries, Inc. (ROCK - Free Report) . Shares have lost about 5.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? 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.
Fourth-Quarter 2016 Results
Gibraltar Industries reported better-than-expected fourth-quarter 2016 results.
Quarterly adjusted earnings of $0.30 per share surpassed the Zacks Consensus Estimate of $0.25. The figure also came higher than the year-ago tally of $0.29.
Full-year 2016 adjusted earnings came in at $1.67 per share, higher than the prior-year tally of $1.09 per share.
Performance in Details
Gibraltar Industries’ net sales were roughly $232 million in the quarter, marginally surpassing the Zacks Consensus Estimate of $230 million. However, the top line fell short of the year-earlier figure of $282 million.
Gross profit margin expanded 490 basis points (bps) to 23.2%. Selling, general and administrative (SG&A) expenses were $43.1 million, up from $42.2 million in the prior-year quarter. Gibraltar Industries reported adjusted operating margin of 8.7% in the quarter, up 240 bps year over year.
Full-year 2016 revenues came in at $1,008 million, lower than $1,041 million recorded in the year-ago period.
Gross profit margin for full-year 2016 came in at 24.3%, up 630 bps year over year. In addition, adjusted operating margin for 2016 was 10%, up 340 bps year over year.
Segmental Details: Residential Products segment generated revenues of around $93 million, down 13% year over year. The downside was witnessed due to the completion of a two-year long contract for centralized mailboxes in Dec 2015.
Industrial and Infrastructure Products yielded revenues of approximately $62 million, down 27% year over year. The decline stemmed from the divestiture of the company’s industrial business in Europe and lower volume of orders accrued due to the dismal conditions prevailing in the commodity and energy-related markets.
The Renewable Energy & Conservation segment’s revenues came in at about $77 million in the quarter under review, down 14% year over year. The segment’s top-line performance was stronger in 2015 due to higher volume gained as a result of decline in the U.S. federal investment tax credit.
Other Financial Aspects: Gibraltar Industries exited the fourth quarter with cash and cash equivalents of $170.2 million, up from $68.9 million at year-end 2015. Long-term debt was $209.2 million, slightly up from $208.9 million recorded at the end of 2015.
In 2016, Gibraltar Industries generated $122.7 million of cash from operating activities compared with $86.7 million generated in the year-earlier period. Capital expenditure was $10.8 million, down from $12.4 million recorded in Dec 31, 2015.
Outlook: Moving ahead, Gibraltar Industries aims to improve its results through a new four-pillar growth strategy. This program involves operational improvements, product innovation, strategic acquisitions and superior portfolio management. The company intends to enhance its profitability through its 80/20 simplification scheme.
However, the company believes that certain factors such as increased innovation expenses, input price inflation and conclusion of business for certain product lines might weigh over future top- and bottom-line performance.
Based on the existing market conditions, Gibraltar Industries estimates to report adjusted earnings within the range of $0.17–$0.21 per share for first-quarter 2017.
The company projects to generate revenues of roughly $1 billion in 2017 and anticipates adjusted earnings within the range of $1.75–$1.85 per share for this year.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one downward revision for the current quarter. While looking back at additional 30 days, we can see even more downward movement. There have been two downward revisions in the last two months. In the past month, the consensus estimate has shifted downward by 37.9% due to these changes.
At this time, Gibraltar Industries' stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.