We are maintaining our Underperform recommendation on Beacon
Roofing with a target price of $26.00. Beacon Roofing reported a 2%
y-o-y decline in third quarter earnings to $0.54 as a result of
lower gross margins from reduced selling prices due to weak demand
and a continued unfavorable shift in sales mix to lower margin
direct shipment and commercial business. Going forward, Beacon
Roofing will benefit from its consistent focus on cost control. Its
investments in equipment and inventory, along with employee
training and greenfield expansion will drive growth. However, a
difficult pricing environment will continue to weigh on gross
Founded in 1928, Beacon Roofing Supply, Inc. (BECN) is one of
the three largest roofing material distributors in the United
States and Canada, with more than 90% of its sales coming from the
U.S. Apart from selling roofing materials, namely asphalt shingles
and single-ply roofing, to both residential and non-residential
markets, Beacon deals in complementary building materials such as
vinyl siding, doors, windows, insulation and waterproofing systems.
The company operates 249 branches across 39 states in the U.S. and
6 provinces in Canada. Local contractors dealing with roof
replacement make up the bulk of its sales.
Beacon Roofing Supply, Inc. (BECN): Read the Full
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