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Gibraltar Industries (ROCK) Up 13.3% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Gibraltar Industries, Inc. (ROCK - Free Report) . Shares have added about 13.3% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is ROCK due for a pullback? 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.

First-Quarter 2018 Results

Gibraltar Industries reported weaker-than-expected bottom-line results for the first quarter of 2018.

Earnings/ Revenues

Quarterly adjusted earnings came in at 26 cents per share, lagging the Zacks Consensus Estimate by a penny. However, the bottom line exceeded the year-ago tally of 20 cents per share.

Net sales in the first quarter came in at $215.3 million, beating the Zacks Consensus Estimate of $214 million. The top line also improved 4.2% year over year.

Segmental Details

Revenues of the Residential Products segment came in at $103.9 million in the reported quarter, marginally down 0.6% year over year. Segmental sales slipped due to lower sales of roofing-related construction products.

Quarterly sales of the Industrial and Infrastructure Products segment came in at $54.4 million, up 8.2% year over year. The upswing stemmed from robust sales of industrial products during the reported quarter.

Renewable Energy and Conservation segment's sales were up 10% year over year to $57 million in the quarter, driven by a robust demand secured from domestic conservation and solar markets.

Costs and Margins

Cost of sales in the first quarter came in at $167 million, up 6.1% year over year. Gross profit margin in the quarter came in at 22.4%, contracting 140 basis points (bps) year over year.

Selling, general and administrative expenses came in at $34.5 million compared to $39.6 million incurred in the year-ago period. Interest expenses were down 8.6% year over year in the reported quarter. Adjusted operating margin in the quarter was 6.4%, flat year over year.

Balance Sheet and Cash Flow

Exiting first-quarter 2018, Gibraltar Industries had cash and cash equivalents worth $200.7 million compared to $222.3 million recorded on Dec 31, 2017. Long-term debt came in at $209.8 million, as against $209.6 million recorded at the end of 2017.

In the first three months of 2018, the company used $22.2 million cash for operating activities, as against $2.3 million recorded in the year-ago tally. Capital expenditures came in at $1 million, decreasing 28.9% year over year.

Outlook

Gibraltar Industries believes sturdier demand for innovative products will bolster its revenues in the upcoming quarters. The company intends to become more competent on the back of strategic acquisitions and implementation of 80/20 simplification projects.

The company estimates to report revenues within $257-$267 million and adjusted earnings within 52-57 cents per share for second-quarter 2018.

However, Gibraltar Industries reaffirmed its view for the full year. The company anticipates generating revenues of more than $1 billion in 2018. Also, adjusted earnings for the year are projected at $1.96-$2.08 per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter.

Gibraltar Industries, Inc. Price and Consensus

VGM Scores

At this time, ROCK has a poor Growth Score of F, however its Momentum is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for value based on our styles scores.

Outlook

Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise ROCK has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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