On January 1, Zacks Investment Research upgraded
Eagle Materials Inc.
) 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
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
), which carries a Zacks Rank #2 (Buy) is also performing well
and is worth considering.
EAGLE MATERIALS (EXP): Free Stock Analysis
MASCO (MAS): Free Stock Analysis Report
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