Beacon Roofing Supply, Inc. (BECN): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
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 margins.

Overview:

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.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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