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Why Is Beacon Roofing (BECN) Down 9.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Beacon Roofing Supply (BECN - Free Report) . Shares have lost about 9.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Beacon Roofing due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Beacon Roofing Q1 Earnings Lag Estimates, Down Y/Y
Beacon Roofing Supply, Inc. reported lower-than-expected earnings and net sales in the first quarter of fiscal 2020. Also, its bottom line declined from the prior-year quarter’s figure due to increased depreciation expenses along with high costs in the fleet repairs, health care and customer-specific event expenses.
Beacon Roofing reported adjusted earnings of 32 cents per share, which missed the Zacks Consensus Estimate of 43 cents by 25.6%. The reported figure declined 46.7% from 60 cents in the year-ago quarter.
Net sales of $1,675 billion lagged the consensus mark of $1,715 billion by 2.3%. The figure also declined 2.7% year over year. Lower hurricane-related demand impacted the results. Residential roofing product sales and complementary product sales declined 4.1% and 3.1%, respectively. However, non-residential roofing product sales inched up 0.2% year over year.
However, organic growth in regions, unaffected by hurricane, was flat year over year during the quarter.
Operating Highlights
Cost of goods sold (contributing 75.5% to net sales) totaled $1,264.4 million, up 0.8% year over year. Gross margin expanded 20 basis points (bps) sequentially to 24.5% but contracted 80 bps year over year.
Adjusted EBITDA margin contracted 150 bps to 5.6%.
Segment Details
Sales in the Residential roofing product segment (contributing 41.9% to total first-quarter fiscal 2020 sales) fell 4.1% year over year to $702.2 million. Sales in the Non-residential roofing product unit (25.1% to total sales) inched up 0.2% year over year to $420.9 million.
Moreover, sales in the Complementary products (33% to total sales) declined 3.1% year over year to $552 million. The decline was mainly due to modest volume declines in deflationary pricing in select categories, including steel studs, lumber and wallboard.
Cash Position
As of Dec 31, 2019, Beacon Roofing had cash and cash equivalents of $43.7 million, up from $18.4 million at 2018-end. Cash used in operations was reported at $125.3 million compared with $336.9 million reported a year ago.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Beacon Roofing has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Beacon Roofing has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Beacon Roofing (BECN) Down 9.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Beacon Roofing Supply (BECN - Free Report) . Shares have lost about 9.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Beacon Roofing due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Beacon Roofing Q1 Earnings Lag Estimates, Down Y/Y
Beacon Roofing Supply, Inc. reported lower-than-expected earnings and net sales in the first quarter of fiscal 2020. Also, its bottom line declined from the prior-year quarter’s figure due to increased depreciation expenses along with high costs in the fleet repairs, health care and customer-specific event expenses.
Beacon Roofing reported adjusted earnings of 32 cents per share, which missed the Zacks Consensus Estimate of 43 cents by 25.6%. The reported figure declined 46.7% from 60 cents in the year-ago quarter.
Net sales of $1,675 billion lagged the consensus mark of $1,715 billion by 2.3%. The figure also declined 2.7% year over year. Lower hurricane-related demand impacted the results. Residential roofing product sales and complementary product sales declined 4.1% and 3.1%, respectively. However, non-residential roofing product sales inched up 0.2% year over year.
However, organic growth in regions, unaffected by hurricane, was flat year over year during the quarter.
Operating Highlights
Cost of goods sold (contributing 75.5% to net sales) totaled $1,264.4 million, up 0.8% year over year. Gross margin expanded 20 basis points (bps) sequentially to 24.5% but contracted 80 bps year over year.
Adjusted EBITDA margin contracted 150 bps to 5.6%.
Segment Details
Sales in the Residential roofing product segment (contributing 41.9% to total first-quarter fiscal 2020 sales) fell 4.1% year over year to $702.2 million. Sales in the Non-residential roofing product unit (25.1% to total sales) inched up 0.2% year over year to $420.9 million.
Moreover, sales in the Complementary products (33% to total sales) declined 3.1% year over year to $552 million. The decline was mainly due to modest volume declines in deflationary pricing in select categories, including steel studs, lumber and wallboard.
Cash Position
As of Dec 31, 2019, Beacon Roofing had cash and cash equivalents of $43.7 million, up from $18.4 million at 2018-end. Cash used in operations was reported at $125.3 million compared with $336.9 million reported a year ago.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Beacon Roofing has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Beacon Roofing has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.