Personal Finance

This Is Why Forterra Inc's Stock Is Spiking Today

Water gushing out of a blue pipe.

What happened

Forterra 's (NASDAQ: FRTA) stock surged on Wednesday morning, bubbling up more than 36% by 11:15 a.m. EST. Driving the rebound was the market's reaction to the company's third-quarter results.

So what

On the surface, Forterra's results didn't look all that great compared to last year's or to analysts' expectations. The company recorded $444.3 million in sales during the quarter, which was only $3 million higher than the year-ago period and $6.9 million below the consensus estimate. The company posted a net loss of $11.5 million, or $0.18 per share. That was well below the $8.4 million, or $0.19 per share, it earned in the year-ago period, and missed expectations by $0.22 per share.

Water gushing out of a blue pipe.

Image source: Getty Images.

During the quarter, Forterra faced several headwinds that impacted its financial results. Hurricanes Harvey and Irma, for example, cut $3.7 million from the bottom line. The company also closed the sale of its U.S. concrete and steel pressure-pipe business during the quarter. That divestiture reduced sales by $8.9 million, and the company recorded a $31.6 million loss on that transaction, which is what pulled it into the red.

Despite those headwinds, Forterra noted that its underlying earnings as measured by adjusted EBITDA came in at $60.9 million, which was above the midpoint of its guidance range. Driving that result was a combination of higher selling prices and lower costs.

Now what

In commenting on what lies ahead, CEO Jeff Bradley stated in the third-quarter press release that he expects continued improvement in the company's earnings due to its "ongoing initiatives, a solid backlog, and favorable market conditions." That optimism could continue driving the stock higher as that earnings improvement materializes, especially since shares are still down more than 67% this year even after today's pop. That said, given its wildride this year, investors need to have an iron stomach before diving into this water stock.

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Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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