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Installed Building (IBP) to Report Q4 Earnings: What Awaits?

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Installed Building Products, Inc. (IBP - Free Report) is slated to report fourth-quarter 2019 results on Feb 27, before the opening bell.

In the last reported quarter, the company’s top and bottom lines surpassed the Zacks Consensus Estimate by 3.9% and 15.1%, respectively. Also, earnings and revenues grew 37.5% and 13.6%, respectively, on a year-over-year basis. The upside was backed by favorable pricing, stable end-market demand, and benefits from geographic and product diversification strategies.

Trend in Estimate Revision

The Zacks Consensus Estimate for earnings for the quarter to be reported has moved 1.1% upward to 86 cents per share over the past 60 days. The said figure indicates a 19.4% increase from the year-ago earnings of 72 cents per share. The consensus mark for revenues is $389.7 million, suggesting a 10.4% year-over-year improvement.

Installed Building Products, Inc. Price and EPS Surprise

Factors to Note

Installed Building Products’ business has been gaining from strategic buyouts, product diversification strategies, favorable pricing trends and stable end-market demand. This insulation installer for the residential new construction market has been benefiting from solid housing markets fundamentals.

Acquisitions have been an integral part of Installed Building Products’ growth strategy. On Dec 9, 2019, it announced the acquisition of Gulf Coast Insulation. Also, in November 2019, it acquired an insulation and garage door installation services business - Premier Building Supply, LLC. Owing to this buyout, the company is expected to have registered solid improvement in revenues. It has been tapping into a robust pipeline of acquisition opportunities across multiple geographies, products and end markets.

The company believes that favorable pricing trends are anticipated to benefit fourth-quarter 2019 results.

However, higher insulation material costs may have been a cause of concern. Also, increased amortization expense due to higher volume of total acquired business operations might have put pressure on its margins in the quarter to be reported.

What Our Model Suggests

Our proven model doesn’t conclusively predict an earnings beat for Installed Building Products this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Installed Building Products — which shares space with Foundation Building Materials, Inc. (FBM - Free Report) , TopBuild Corp. (BLD - Free Report) and Simpson Manufacturing Co., Inc. (SSD - Free Report) in the Zacks Building Products - Miscellaneous industry — has an Earnings ESP of 0.00% and currently carries a Zacks Rank #1. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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