Beacon Roofing reported fourth-quarter adjusted earnings $0.48 per
share, which declined 14% year over year owing to lower gross
margins and a continued unfavorable shift in sales mix to lower
margin direct shipment and commercial business. For 2014 also,
adjusted earnings slumped 25.5% year over year to $1.08 per share
due to softer overall demand following the adverse and extended
weather conditions during the first half of 2014 along with
incremental operating expenses. Nevertheless, solid progress on
elements of strategic plan will remain tailwinds for the company it
continues to experience pressure on gross margins due to a soft
residential market coupled with heightened competition. We are
maintaining our Underperform recommendation on Beacon Roofing with
a target price of $25.00.
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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