Zacks Investment Research upgraded Simpson Manufacturing Co., Inc. ( SSD ), the leading manufacturer of wood construction products, to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold) on Apr 9, 2014.LINCOLN ELECTRC (LECO): Free Stock Analysis ReportGIBRALTAR INDUS (ROCK): Free Stock Analysis ReportSIMPSON MFG INC (SSD): Free Stock Analysis ReportUTD RENTALS INC (URI): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research
Why the Upgrade?
Simpson Manufacturing reported upbeat third-quarter 2013 earnings on Feb 6. Results improved 33% to 16 cents per share from 12 cents in the year-earlier quarter. Earnings were ahead of the Zacks Consensus Estimate of 12 cents. A positive earnings surprise of 33% was also recorded. Simpson Manufacturing has delivered 3 positive earnings surprises in the past 4 quarters, with an average of 5.99%.
Total revenue increased 10.8% to $195.9 million, primarily attributable to improved sales in Asia Pacific and North America. North American sales benefited from improved economic conditions, including an increase in housing starts compared with the prior-year quarter. Excluding the effect of the liquidation of heavy-duty mechanical anchor inventory, sales in Europe increased 5.2%, driven by increased sales volumes.
For fiscal 2014, Simpson expects its gross margin to be between 44% and 45%. Effective 2014, tax rate will be between 37% and 39%.
Simpson Manufacturing will continue to benefit from increased housing starts in North America. The company will profit from its strategic initiatives, which include an expanded offering of concrete construction products, specialty chemicals and wood construction products, particularly truss plate and software offerings. To support these initiatives, the company expects to hire additional personnel and provide additional resources in 2014.
Other Stocks to Consider
Other players in the Building & Construction - Miscellaneous space which look attractive at current levels include Gibraltar Industries, Inc. ( ROCK ), United Rentals, Inc . ( URI ) and Lincoln Electric Holdings Inc . ( LECO ), all of which hold a Zacks Rank #2.