On Oct 17, 2013, we raised our recommendation on
Gibraltar Industries Inc.
) to Neutral from Underperform, based on the improving global
Why the Upgrade?
Gibraltar Industries manufactures products that range from
ventilation and expanded metal to mail storage solutions and rain
dispersion products and solutions. The products are supplied to
the industrial and buildings market. Gibraltar Industries has a
leading presence in the industry due to its diversified product
offering, through different market players like wholesalers,
retail home centers, residential, commercial and transportation
contractors, among others.
With the latest development of the construction industry,
mainly in the U.S., we expect the company to generate significant
revenues in the coming quarters. Gibraltar Industries has been
gaining from the construction of multi-family buildings as well
as new constructions in the residential sector. The company
expects its repair and remodeling activities to grow in the
quarters ahead and boost the total revenue.
Gibraltar Industries' inorganic growth has been splendid over
the past quarters. The three acquisitions completed in the fourth
quarter of 2012 contributed roughly 7.3% to revenue growth in the
second quarter of 2013. The company expects these acquisitions to
boost revenues in the second half of 2013 as well.
However, the company's overseas operations expose it to
various environmental and economical laws as well as cultural
diversity. This may lead to severe operational disruptions for
The company's customer concentration risks also raise our
concern. Moreover, the company does not have long-term contracts
with its customers, leading to a possibility of termination of
the purchase. This may lead to a severe loss to the business.
Other Stocks to Consider
Gibraltar Industries currently carries a Zacks Rank #3 (Hold).
Other stocks worth a watch in the industry include
Shiloh Industries Inc.
Armstrong World Industries, Inc.
). While Shiloh Industries carries a Zacks Rank #1 (Strong Buy),
Armstrong World Industries and Masco Corp. carry a Zacks Rank #2
ARMSTRONG WORLD (AWI): Free Stock Analysis
MASCO (MAS): Free Stock Analysis Report
GIBRALTAR INDUS (ROCK): Free Stock Analysis
SHILOH INDS INC (SHLO): Get Free Report
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