The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Fortune Brands (NYSE: FBIN) and the rest of the home construction materials stocks fared in Q2.
Traditionally, home construction materials companies have built economic moats with expertise in specialized areas, brand recognition, and strong relationships with contractors. More recently, advances to address labor availability and job site productivity have spurred innovation that is driving incremental demand. However, these companies are at the whim of residential construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates. Additionally, the costs of raw materials can be driven by a myriad of worldwide factors and greatly influence the profitability of home construction materials companies.
The 10 home construction materials stocks we track reported a strong Q2. As a group, revenues missed analysts’ consensus estimates by 0.7% while next quarter’s revenue guidance was in line.
Luckily, home construction materials stocks have performed well with share prices up 11.2% on average since the latest earnings results.
Fortune Brands (NYSE: FBIN)
Targeting a wide customer base of residential and commercial customers, Fortune Brands (NYSE: FBIN) makes plumbing, security, and outdoor living products.
Fortune Brands reported revenues of $1.20 billion, down 3% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with full-year EPS guidance exceeding analysts’ expectations and a solid beat of analysts’ EBITDA estimates.
Interestingly, the stock is up 12.3% since reporting and currently trades at $61.50.
Is now the time to buy Fortune Brands? Access our full analysis of the earnings results here, it’s free.
Best Q2: Masco (NYSE: MAS)
Headquartered just outside of Detroit, MI, Masco (NYSE: MAS) designs and manufactures home-building products such as glass shower doors, decorative lighting, bathtubs, and faucets.
Masco reported revenues of $2.05 billion, down 1.9% year on year, outperforming analysts’ expectations by 2.5%. The business had a stunning quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ adjusted operating income estimates.
The market seems happy with the results as the stock is up 14.9% since reporting. It currently trades at $75.58.
Is now the time to buy Masco? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Gibraltar (NASDAQ: ROCK)
Gibraltar (NASDAQ: ROCK) makes renewable energy, agriculture technology and infrastructure products. Its mission statement is to make everyday living more sustainable.
Gibraltar reported revenues of $309.5 million, up 13.1% year on year, falling short of analysts’ expectations by 17.9%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations significantly and full-year EPS guidance missing analysts’ expectations significantly.
Gibraltar delivered the fastest revenue growth but had the weakest performance against analyst estimates and weakest full-year guidance update in the group. Interestingly, the stock is up 2.1% since the results and currently trades at $65.70.
Read our full analysis of Gibraltar’s results here.
Builders FirstSource (NYSE: BLDR)
Headquartered in Irving, TX, Builders FirstSource (NYSE: BLDR) is a construction materials manufacturer that offers a variety of lumber and lumber-related building products.
Builders FirstSource reported revenues of $4.23 billion, down 5% year on year. This number lagged analysts' expectations by 0.7%. It was a slower quarter as it also recorded a miss of analysts’ Windows, doors & millwork revenue estimates and full-year revenue guidance missing analysts’ expectations significantly.
The stock is up 15.1% since reporting and currently trades at $145.
Read our full, actionable report on Builders FirstSource here, it’s free.
JELD-WEN (NYSE: JELD)
Founded in the 1960s as a general wood-making company, JELD-WEN (NYSE: JELD) manufactures doors, windows, and other related building products.
JELD-WEN reported revenues of $823.7 million, down 16.5% year on year. This result surpassed analysts’ expectations by 1.7%. It was an exceptional quarter as it also produced a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
JELD-WEN achieved the highest full-year guidance raise but had the slowest revenue growth among its peers. The stock is up 35.2% since reporting and currently trades at $6.28.
Read our full, actionable report on JELD-WEN here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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