NCI Building Achieves 52-Week High - Analyst Blog


Shares of NCI Building Systems Inc. ( NCS ) hit a new 52-week high of $18.77 on Jan 9, up from its previous high of $17.98.

The stock closed at $18.67 at the end of trading yesterday, with a solid one-year return of about 27.7% and year-to-date return of about 6%. The average volume of shares traded over the last three months was roughly 260K.

Texas-based NCI Building is a metal building components maker with a market cap of roughly $1.4 billion and long-term expected earnings growth of 10%.

Growth Drivers

On Dec 10, NCI Building reported adjusted earnings of 10 cents per share in the fourth quarter of fiscal 2013 (ended Nov 3, 2013), which rose 25% year over year and beat the Zacks Consensus Estimate of 7 cents.

Total revenue also climbed 11% year over year to $400 million in the quarter, surpassing the Zacks Consensus Estimate of $347 million. The improvement was driven by higher volumes in each of the operating segments, along with contribution from an extra week in the quarter.

The company incurred almost $20 million of incremental costs during fiscal 2013. These investments will help enhance profitability in fiscal 2014 with the absorption of ramp-up costs.

In early 2013, NCI Building reopened its Metal Coaters Coil Coating Facility in Middletown, Ohio. With this venture, the company expects to extend its coil coating operations into the upper Midwest and Northeast.

On the other hand, the Metl-Span acquisition will position NCI Building as a leader in the insulated metal panel business by diversifying and expanding its existing product range. NCI Building will also benefit from a growing customer base as well as distribution network in North America.

In addition, last year, a fire damaged two ovens at the Jackson, Miss., coatings facility of NCI Building. However, the company resumed shipping within a few days and quickly shifted production to other facilities. NCI Building also realized a gain of $1 million on the insurance recovery for the damaged equipment in the fourth quarter. Moreover, the company hopes to receive further reimbursements, which would be recognized as gains in the future.

However, management did not provide any specific guidance for fiscal 2014. Business conditions at architectural firms have consistently improved in the past several quarters, depicting upper single-digit year-over-year growth in non-residential new construction in 2014.

Currently, NCI Building carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Some better-ranked stocks in the same sector include James Hardie Industries plc ( JHX ), Masco Corp. ( MAS ) and United Rentals, Inc. ( URI ). While James Hardie Industries sports a Zacks Rank #1 (Strong Buy), Masco and United Rentals have a Zacks Rank #2 (Buy).

JAMES HARDI-ADR (JHX): Free Stock Analysis Report

MASCO (MAS): Free Stock Analysis Report

NCI BLDG SYSTEM (NCS): Free Stock Analysis Report

UTD RENTALS INC (URI): Free Stock Analysis Report

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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: JHX , MAS , NCS , URI

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