Eagle Materials Upgraded to Strong Buy - Analyst Blog

By
A A A

On January 1, Zacks Investment Research upgraded Eagle Materials Inc. ( EXP ) to a Zacks Rank #1 (Strong Buy) as the stock continues to gain momentum from improving housing fundamentals.

Why the Upgrade?

Eagle Materials reported solid second quarter fiscal 2013 results and appears set to do well again when it reports third quarter results later this month.

On October 29, Eagle Materials reported fiscal second quarter (ended September 30, 2012) earnings of 49 cents per share. The earnings beat the Zacks Consensus Estimate by 4.26%. The result soared 250.0% from the prior-year quarter, driven largely by wallboard pricing gains, higher volumes in all lines of business and lower recycled fiber input costs.

Net sales came in at $165.0 million, up 22.0% from the prior-year quarter, driven by higher demand for its products as well as increased selling prices.

Estimates are continuously rising, reflecting expectations for significantly higher year-over-year earnings growth rates in fiscal 2013 and 2014.

Over the last 90 days, the Zacks Consensus Estimate for fiscal 2013 has gone up by 5.1% to $1.64, reflecting year-over-year growth rate of 198.4%. The Zacks Consensus Estimate for fiscal 2014 has advanced 12.7% to $2.57 over the same time frame, reflecting year-over-year growth rate of 56.6%.

The U.S. housing industry is improving steadily. Demand for new home construction is gaining traction, which is leading to higher demand for Eagle Materials' products. Home prices have also started moving up lately with market demand gaining momentum.

The company has bright prospects ahead thanks to an improving end-market outlook, cost reduction efforts and an acquisition-based growth strategy. Moreover, the acquisition of two cement plants from Lafarge North America late last year is expected to increase Eagle Materials' cement capacity by approximately 60%, thereby allowing it to take advantage of the U.S. construction industry's recovery.

Eagle Materials will report its fiscal third quarter results on January 29. The Zacks Consensus Estimate at the moment is 43 cents per share. With a favorable Zacks Rank and Earnings ESP of 4.7%, Eagle Materials looks poised to beat the Zacks Consensus Estimate in the quarter.

Other Stocks to Consider

Eagle Materials' peer Masco Corporation ( MAS ), which carries a Zacks Rank #2 (Buy) is also performing well and is worth considering.



EAGLE MATERIALS (EXP): Free Stock Analysis Report

MASCO (MAS): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



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.



This article appears in: Investing , Business , Stocks

Referenced Stocks: EXP , MAS

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

36,586,989
  • $41.35 ▼ 2.29%
33,435,019
  • $42.20 ▼ 10.86%
31,919,424
  • $9.72 ▼ 8.30%
30,045,396
  • $26.49 ▼ 1.41%
29,014,873
  • $8.05 ▼ 8%
27,308,018
  • $14.66 ▼ 8.32%
23,704,242
  • $118.93 ▼ 0.06%
23,514,654
  • $17.04 ▼ 0.41%
As of 11/28/2014, 01:06 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com