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Zacks Industry Outlook Highlights Argan, Simpson Manufacturing, Everus Construction and Construction Partners

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For Immediate Release

Chicago, IL – April 10, 2026 – Today, Zacks Equity Research discusses Argan, Inc. (AGX - Free Report) , Simpson Manufacturing Co., Inc. (SSD - Free Report) , Everus Construction Group, Inc. (ECG - Free Report) and Construction Partners, Inc. (ROAD - Free Report) .

Industry: Building Products

Link: https://www.zacks.com/commentary/2897522/4-building-product-stocks-to-buy-despite-ongoing-industry-pressure

The Zacks Building Products - Miscellaneous industry remains under pressure amid tariffs, elevated input and labor costs and persistent inflation. Ongoing supply-chain disruptions and high energy expenses are adding to cost burdens, while cautious developer sentiment continues to weigh on commercial activity. Housing affordability challenges remain a key concern, with mortgage rates still above 6% keeping demand subdued as homeowners stay locked into lower-rate loans and new construction absorbs higher costs. These dynamics are pressuring margins and limiting near-term recovery prospects for both builders and end markets.

Despite these near-term challenges, the long-term outlook remains favorable. Increased federal spending on infrastructure projects, including transportation, broadband and climate-resilient initiatives, along with global supply-chain reinvestment and expanding AI and energy-related construction, is expected to support growth.

At the same time, companies are focusing on cost efficiencies, digital adoption and strategic acquisitions to strengthen operations and enhance market positioning. Against this backdrop, Argan, Inc., Simpson Manufacturing Co., Inc., Everus Construction Group, Inc. and Construction Partners, Inc. are well-positioned to capitalize on these positive trends.

Industry Description

The Zacks Building Products - Miscellaneous industry primarily comprises manufacturers, designers and distributors of home improvement and building products like ceiling systems, doors, windows, flooring and metal products. Some industry players provide solutions to rehabilitate the aging infrastructure, primarily pipelines in the wastewater, water, energy, mining and refining industries.

The companies also manufacture expansion joints and structural bearings, ventilation products, ground-mounted solar racking and commercial greenhouses, as well as mail storage (solutions including mailboxes along with package delivery products). Companies in this industrial cohort also rent out equipment to a diverse customer base, including construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities.

4 Trends Shaping the Future of the Building Products Industry

Tariff Impact: The U.S. administration's tariff policies are reshaping the U.S. building products industry by increasing costs, disrupting supply chains and influencing consumer behavior. While these policies aim to bolster domestic manufacturing, the immediate effects include heightened inflation and challenges for builders and consumers alike.

Persistent uncertainty around tariffs, inflation, labor availability and interest rates is expected to slow commercial construction activity, particularly in more discretionary renovation projects. While ground-level bidding activity has remained relatively stable, first-time bidding for new projects has softened, reflecting hesitation among developers amid economic volatility. Input cost inflation, especially in energy and raw materials, remains a headwind. Since many building products are energy-intensive to produce and ship, even modest fluctuations in fuel or power costs can have a meaningful effect on margins.

Rising Costs & Soft Residential Market: Inflationary headwinds with respect to transportation costs, material costs and energy costs have been a pressing concern. Also, rising labor costs are compressing margins. These are dampening the companies' operating performance. Although the industry participants have been working to recover higher costs through various price increases, they expect this ongoing volatility in material and transportation costs to be a concern.

Apart from higher raw material costs, the companies bear expenses related to product launches. If companies are unable to offset these costs through price increases or supply-chain initiatives, their profits may be affected.

The industry's outlook is closely tied to the U.S. housing and renovation markets. The residential real estate market has been facing several challenges, including elevated rates, which make it difficult for buyers to secure affordable mortgages.

The Federal Reserve left interest rates unchanged at its March 17 to March 18, 2026 meeting, maintaining the benchmark range at 3.5-3.75%. The central bank expects only one rate cut in 2026, reflecting a cautious stance. Mortgage rates have not fallen in step with the policy move, staying above 6%, which limits relief for buyers.

Meanwhile, supply remains constrained as many homeowners are unwilling to give up their low-rate mortgages, while elevated construction costs hinder new builds. This shortage sustains competition and keeps prices high. Coupled with stricter lending standards, persistent inflation and broader economic uncertainty have been acting as the deeper structural challenges to housing demand and affordability unresolved.

Expansion of AI & Energy-Related Construction: The rapid growth of AI and cloud computing is driving a surge in data center construction, which has become one of the most important demand drivers for building products in 2026. These facilities require large volumes of materials and highly specialized systems for power, cooling and connectivity, making them more complex and capital-intensive than traditional projects.

At the same time, rising electricity demand is accelerating investments in power generation, grid modernization and energy storage. Together, these trends are creating a multi-year pipeline of large-scale projects, providing strong, durable demand and supporting growth across multiple building product categories.

Infrastructural Push & Operational Excellence, Product Innovation & Acquisitions: The industry players are expected to benefit from strong global trends in infrastructure modernization, energy transition, national security and a potential super-cycle in global supply-chain investments. The U.S. administration's endeavor to rebuild the nation's deteriorating roads and bridges and fund new climate-resilient and broadband initiatives is expected to aid the companies.

Meanwhile, the industry participants have been undertaking strong cost-saving initiatives like business consolidation, system implementations, plant/branch closures, improvement in the global supply chain and headcount reductions to boost profitability. Industry participants have also been strategically investing in new products, sales and support services, digitally enabled solutions and advanced manufacturing capabilities to boost revenues. The companies are also following a systematic acquisition strategy to supplement organic growth and expand access to additional markets and products.

Zacks Industry Rank Indicates Dull Prospects

The Zacks Building Products – Miscellaneous industry is a 33-stock group within the broader Zacks Construction sector. The industry currently carries a Zacks Industry Rank #183, which places it in the bottom 25% of more than 250 Zacks industries.

The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

The industry's positioning in the bottom 50% of the Zacks-ranked industries is a result of a lower earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group's earnings growth potential. Since February 2026, the industry's earnings estimates for 2026 have decreased to $4.44 per share from $4.47.

Despite the industry's blurred near-term view, we will present a few stocks that one may consider adding to their portfolio. Before that, it's worth taking a look at the industry's shareholder returns and current valuation.

Industry Lags S&P 500 & Sector

The Zacks Building Products – Miscellaneous industry has underperformed the Zacks S&P 500 Composite and the broader Zacks Construction sector over the past year.

Over this period, the industry has gained 20.8%, below the broader sector's 29.9% increase. Meanwhile, the Zacks S&P 500 Composite has gained 32.4% over the same period.

Industry's Current Valuation

On the basis of the forward 12-month price-to-earnings, which is a commonly used multiple for valuing building products' stocks, the industry is trading at 16.67X versus the S&P 500's 20.74X and the sector's 19.37X.

Over the past five years, the industry has traded as high as 19.92X, as low as 10.61X and at a median of 16.04X.

4 Building Product Stocks to Buy Now

We have selected four stocks from the Zacks universe of building products that have solid growth prospects.

Argan: Based in Arlington, VA, Argan provides EPC and related services for power and renewable energy projects, along with industrial construction and telecom infrastructure services. The company has been benefiting from strong long-term demand for reliable power generation and grid infrastructure.

The company is well-positioned to benefit from the replacement of aging natural gas facilities, rising electricity consumption driven by data centers, AI workloads and broader electrification trends and continued investment in grid reliability. Its ability to execute large, complex combined-cycle gas projects gives Argan a competitive advantage in a market with limited qualified contractors. A diversified project mix across natural gas, renewables, industrial construction and telecom infrastructure further supports stability.

With a disciplined project selection approach, strong customer relationships and a solid balance sheet, Argan appears well placed for sustained growth and profitability over the coming years. The company ended fiscal 2026 with a record backlog of about $2.9 billion and a robust pipeline, providing multi-year revenue visibility.

Argan, a Zacks Rank #1 (Strong Buy) stock, has gained 326.3% over the past year. AGX has seen an upward estimate revision for fiscal 2027 earnings to $11.44 per share from $10.18 over the past 30 days, depicting analysts' optimism for the company's prospects. The estimated figure indicates 17.5% year-over-year growth for fiscal 2027 on 35.9% growth in revenues. The company's earnings surpassed the Zacks Consensus Estimate in the trailing three quarters, the average being 39.7%. You can see the complete list of today's Zacks #1 Rank stocks here.

Construction Partners: Based in Dothan, AL, Construction Partners is a civil infrastructure firm focused on building and maintaining roadways across eight U.S. states. The company's growth outlook remains strong, supported by both macro tailwinds and execution. The company benefits from robust infrastructure spending, with public contract awards expected to rise 10–15%, while steady commercial demand is driven by Sunbelt population migration, reshoring and AI/data center buildouts. A record $3.09 billion backlog provides strong revenue visibility.

Growth is further supported by an active acquisition pipeline, geographic expansion (notably in Houston) and integration-driven synergies, alongside greenfield plant additions. Management's "Road 2030" plan targets revenue doubling and margin expansion, reinforcing long-term growth visibility.

Construction Partners, a Zacks Rank #1 stock, has gained 47.2% over the past year. ROAD has seen an upward estimate revision for fiscal 2026 earnings to $2.89 from $2.88 per share over the past seven days. The estimated figure indicates 31.4% year-over-year growth for fiscal 2026, on 25.2% revenue growth. The company's earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters and missed on the other two, with an average being 85.3%.

Everus: Based in Bismarck, ND, Everus delivers contracting services across the United States. The company has been benefiting from strong end-market demand, rising backlog and solid execution. Everus ended 2025 with a record backlog of $3.2 billion, providing clear revenue visibility into 2026 and beyond. Growth is being driven by expanding opportunities in data centers, semiconductors, transmission and undergrounding projects, along with continued momentum in its E&M segment.

Strategic initiatives such as geographic expansion, prefabrication and modular construction are improving efficiency and margins. Additionally, a strong balance sheet supports acquisitions and organic investments, positioning Everus for sustained growth.

Everus, a Zacks Rank #2 (Buy) stock, has gained 237.7% over the past year. ECG's earnings estimates have increased for 2026 earnings to $4.16 per share from $3.79 over the past 60 days. The estimated figure indicates 5.3% year-over-year growth for 2026, on 10.9% growth in revenues. The company's earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 66.3%.

Simpson: Based in Pleasanton, CA, Simpson provides structural connection solutions for wood, concrete and steel globally. Despite a soft housing backdrop, the company is gaining share and consistently outperforming U.S. housing starts, supported by strong pricing actions, innovation and customer-focused solutions. Growth is being driven by expansion in OEM and off-site construction, rising adoption of mass timber projects and increasing traction in component manufacturing supported by software solutions.

Digital initiatives, including cloud-based platforms, are enhancing customer stickiness. Strategic acquisitions and new product launches further strengthen capabilities. With strong margins, cost-saving initiatives and continued market share gains, Simpson is well-positioned for steady long-term growth.

Simpson, a Zacks Rank #2 stock, has gained 18.5% over the past year. SSD's earnings estimates have increased for 2026 earnings to $8.97 per share from $8.75 over the past 60 days. The estimated figure indicates 8.9% year-over-year growth for 2026, on 3% growth in revenues. The company's earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 6.9%. It currently holds a VGM Score of B.

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