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In the last reported quarter, the company’s adjusted earnings per share (EPS) and revenues surpassed the Zacks Consensus Estimate by 18.1% and 1.8%, respectively. On a year-over-year basis, total revenues decreased 1%, but EPS grew 28%.
Encouragingly, earnings topped analysts’ expectations in 20 of the trailing 21 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for second-quarter EPS has increased to $4.37 from $4.29 over the past seven days. The estimated figure indicates a 3.6% increase from the year-ago EPS of $4.22. The consensus mark for revenues is pegged at $2.87 billion, suggesting a 12.1% year-over-year rise.
In the North American market, the building and construction sectors remained favorable in the second quarter, sustaining strong demand for Owens Corning's products. This positive outlook is driven by ongoing repair and remodeling activities, which, along with storm carryover, are expected to boost the demand for roofing products.
Specifically, in the United States, the housing market continues to show robust demand. The low inventory of existing homes is creating a positive environment for single-family new construction, further supporting the need for the company’s products. Yet, lower residential shingle roofing shipments in the domestic market are expected to have impacted the company’s top line.
However, outside North America, macroeconomic trends and geopolitical tensions are likely to persist, resulting in slow global economic growth. These factors may have weighed its international operations.
Again, the acquisition of Masonite will contribute to the company’s sales in the to-be-reported quarter. The buyout expanded Owens Corning's leadership position in the branded residential building product space and added a product category that complements its current interior and exterior residential offerings. The acquisition also creates a scalable new growth platform, expanding its total addressable market to $75 billion.
Overall, for the second quarter of 2024, OC expects its results to mirror those of the prior year, with sales remaining relatively flat and EBIT margins hovering around 20%.
Segment-wise, for the Roofing segment (which accounted for 41.6% of total 2023 sales), in the peak roofing season, Owens Corning anticipates revenue growth in the low to mid-single digits. Good demand is expected across several regions, which will support this growth. Despite anticipated challenges, the overall demand for Owens Corning’s shingles is expected to remain relatively flat, indicating a stable market presence and consistent customer base.
However, OC foresees a decrease in ARMA market shipments in the second quarter of 2024, primarily due to the exceptionally high volumes shipped in the year-ago quarter following significant storm activity. This creates a tough comparison base, leading to an expected decline in shipments by low double digits.
Additionally, the overall volume for the business is anticipated to be negative, largely due to the exit from the protective packaging business, which will affect the total volume of shipments. Overall, for the second quarter of 2024, Owens Corning's Roofing segment is positioned to experience modest revenue growth driven by peak season demand. However, this positive outlook is tempered by the expected decline in ARMA market shipments and the negative volume impact of exiting the protective packaging business.
OC also expects costs to be slightly inflationary and anticipates EBIT margins in the low 30% range (compared to 30% a year ago).
The Zacks Consensus Estimate for OC’s Roofing segment is currently pegged at $1,154 million, up from $1,123 million a year ago and $957 million in the prior quarter. The consensus mark for the segment’s EBIT is currently pegged at $362 million, up from $338 million a year ago and $286 million in the prior quarter.
Owens Corning's Insulation segment (which accounted for 37.9% of total 2023 sales) is poised for modest growth in the second quarter of 2024, with revenues expected to rise in the low to mid-single digits. This growth will be driven by higher volumes and a slight positive impact from price increases. In North America, the residential insulation market is set to see volume increases and further benefits from the first-quarter price hike. Conversely, the European market remains challenging due to broader economic conditions.
On the cost side, input materials are expected to be inflationary, potentially narrowing the positive price-cost margin. Additionally, the company plans to incur incremental costs as it evaluates manufacturing upgrades and modernization for its U.S. fiberglass plants.
Despite these pressures, Owens Corning aims to maintain EBIT margins similar to the second quarter of 2023. Overall, the Insulation segment's performance will be shaped by market dynamics, cost management, and strategic investments in manufacturing improvements.
The Zacks Consensus Estimate for OC’s Insulation segment is currently pegged at $938 million, up from $905 million a year ago and $904 million in the prior quarter. The consensus mark for the segment’s EBIT is currently pegged at $169 million, up from $163 million a year ago and $161 million in the prior quarter.
Owens Corning's Composites segment (which accounted for 23.6% of total 2023 sales) is expected to face challenges in the second quarter of 2024, with revenues anticipated to decrease just below double digits due to ongoing pressure in the glass reinforcements market. Despite stabilizing volumes and spot prices, overall pricing is projected to decline year over year.
The company will proactively adjust production to align with demand. However, the non-wovens business is forecasted to perform well with solid demand. EBIT margins are expected to remain in the high single digits, similar to the first quarter. This mixed performance reflects both market pressures and areas of resilience within the segment.
The Zacks Consensus Estimate for OC’s Composites segment is currently pegged at $546 million, down from $620 million a year ago but up from $523 million in the prior quarter. The consensus mark for the segment’s EBIT is currently pegged at $46.6 million, down from $87 million a year ago but slightly up from $46 million in the prior quarter.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for OC this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
Currently, OC has an Earnings ESP of +2.90% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Peer Release
Masco Corporation (MAS - Free Report) reported strong earnings for the second quarter of 2024 amid challenging market conditions. Strong operational efficiency helped it deliver solid results. The company reported adjusted EPS of $1.20, which beat the consensus mark by 3.5% and increased 0.8% from a year-ago. However, net sales missed the analysts’ expectations and declined on a year-over-year basis. Masco’s focus on a balanced capital deployment strategy helped it return $206 million to shareholders via dividends and share repurchases.
Masco narrowed its adjusted EPS guidance while the mid-point remains unaffected.
Stocks With Favorable Combination
Here are some other companies in the Zacks Construction sector, which,s according to our model, have the right combination of elements to beat on earnings in their respective quarters to be reported.
DY’s earnings for the to-be-reported quarter are expected to increase 7.4%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 30.2%.
Aspen Aerogels, Inc. (ASPN - Free Report) has an Earnings ESP of +23.53% and sports a Zacks Rank #1.
ASPN’s earnings topped the consensus mark in all the last four quarters, with the average being 68.2%. Earnings for the to-be-reported quarter are expected to grow 122.7% year over year.
Image: Bigstock
Owens Corning (OC) to Report Q2 Earnings: What's in Store?
Owens Corning (OC - Free Report) is scheduled to report second-quarter 2024 results on Aug 6, before the opening bell.
In the last reported quarter, the company’s adjusted earnings per share (EPS) and revenues surpassed the Zacks Consensus Estimate by 18.1% and 1.8%, respectively. On a year-over-year basis, total revenues decreased 1%, but EPS grew 28%.
Encouragingly, earnings topped analysts’ expectations in 20 of the trailing 21 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for second-quarter EPS has increased to $4.37 from $4.29 over the past seven days. The estimated figure indicates a 3.6% increase from the year-ago EPS of $4.22. The consensus mark for revenues is pegged at $2.87 billion, suggesting a 12.1% year-over-year rise.
Owens Corning Inc Price and EPS Surprise
Owens Corning Inc price-eps-surprise | Owens Corning Inc Quote
Factors to Consider in Q2
In the North American market, the building and construction sectors remained favorable in the second quarter, sustaining strong demand for Owens Corning's products. This positive outlook is driven by ongoing repair and remodeling activities, which, along with storm carryover, are expected to boost the demand for roofing products.
Specifically, in the United States, the housing market continues to show robust demand. The low inventory of existing homes is creating a positive environment for single-family new construction, further supporting the need for the company’s products. Yet, lower residential shingle roofing shipments in the domestic market are expected to have impacted the company’s top line.
However, outside North America, macroeconomic trends and geopolitical tensions are likely to persist, resulting in slow global economic growth. These factors may have weighed its international operations.
Again, the acquisition of Masonite will contribute to the company’s sales in the to-be-reported quarter. The buyout expanded Owens Corning's leadership position in the branded residential building product space and added a product category that complements its current interior and exterior residential offerings. The acquisition also creates a scalable new growth platform, expanding its total addressable market to $75 billion.
Overall, for the second quarter of 2024, OC expects its results to mirror those of the prior year, with sales remaining relatively flat and EBIT margins hovering around 20%.
Segment-wise, for the Roofing segment (which accounted for 41.6% of total 2023 sales), in the peak roofing season, Owens Corning anticipates revenue growth in the low to mid-single digits. Good demand is expected across several regions, which will support this growth. Despite anticipated challenges, the overall demand for Owens Corning’s shingles is expected to remain relatively flat, indicating a stable market presence and consistent customer base.
However, OC foresees a decrease in ARMA market shipments in the second quarter of 2024, primarily due to the exceptionally high volumes shipped in the year-ago quarter following significant storm activity. This creates a tough comparison base, leading to an expected decline in shipments by low double digits.
Additionally, the overall volume for the business is anticipated to be negative, largely due to the exit from the protective packaging business, which will affect the total volume of shipments. Overall, for the second quarter of 2024, Owens Corning's Roofing segment is positioned to experience modest revenue growth driven by peak season demand. However, this positive outlook is tempered by the expected decline in ARMA market shipments and the negative volume impact of exiting the protective packaging business.
OC also expects costs to be slightly inflationary and anticipates EBIT margins in the low 30% range (compared to 30% a year ago).
The Zacks Consensus Estimate for OC’s Roofing segment is currently pegged at $1,154 million, up from $1,123 million a year ago and $957 million in the prior quarter. The consensus mark for the segment’s EBIT is currently pegged at $362 million, up from $338 million a year ago and $286 million in the prior quarter.
Owens Corning's Insulation segment (which accounted for 37.9% of total 2023 sales) is poised for modest growth in the second quarter of 2024, with revenues expected to rise in the low to mid-single digits. This growth will be driven by higher volumes and a slight positive impact from price increases. In North America, the residential insulation market is set to see volume increases and further benefits from the first-quarter price hike. Conversely, the European market remains challenging due to broader economic conditions.
On the cost side, input materials are expected to be inflationary, potentially narrowing the positive price-cost margin. Additionally, the company plans to incur incremental costs as it evaluates manufacturing upgrades and modernization for its U.S. fiberglass plants.
Despite these pressures, Owens Corning aims to maintain EBIT margins similar to the second quarter of 2023. Overall, the Insulation segment's performance will be shaped by market dynamics, cost management, and strategic investments in manufacturing improvements.
The Zacks Consensus Estimate for OC’s Insulation segment is currently pegged at $938 million, up from $905 million a year ago and $904 million in the prior quarter. The consensus mark for the segment’s EBIT is currently pegged at $169 million, up from $163 million a year ago and $161 million in the prior quarter.
Owens Corning's Composites segment (which accounted for 23.6% of total 2023 sales) is expected to face challenges in the second quarter of 2024, with revenues anticipated to decrease just below double digits due to ongoing pressure in the glass reinforcements market. Despite stabilizing volumes and spot prices, overall pricing is projected to decline year over year.
The company will proactively adjust production to align with demand. However, the non-wovens business is forecasted to perform well with solid demand. EBIT margins are expected to remain in the high single digits, similar to the first quarter. This mixed performance reflects both market pressures and areas of resilience within the segment.
The Zacks Consensus Estimate for OC’s Composites segment is currently pegged at $546 million, down from $620 million a year ago but up from $523 million in the prior quarter. The consensus mark for the segment’s EBIT is currently pegged at $46.6 million, down from $87 million a year ago but slightly up from $46 million in the prior quarter.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for OC this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
Currently, OC has an Earnings ESP of +2.90% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Peer Release
Masco Corporation (MAS - Free Report) reported strong earnings for the second quarter of 2024 amid challenging market conditions. Strong operational efficiency helped it deliver solid results. The company reported adjusted EPS of $1.20, which beat the consensus mark by 3.5% and increased 0.8% from a year-ago. However, net sales missed the analysts’ expectations and declined on a year-over-year basis. Masco’s focus on a balanced capital deployment strategy helped it return $206 million to shareholders via dividends and share repurchases.
Masco narrowed its adjusted EPS guidance while the mid-point remains unaffected.
Stocks With Favorable Combination
Here are some other companies in the Zacks Construction sector, which,s according to our model, have the right combination of elements to beat on earnings in their respective quarters to be reported.
Dycom Industries (DY - Free Report) has an Earnings ESP of +4.43% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
DY’s earnings for the to-be-reported quarter are expected to increase 7.4%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 30.2%.
Aspen Aerogels, Inc. (ASPN - Free Report) has an Earnings ESP of +23.53% and sports a Zacks Rank #1.
ASPN’s earnings topped the consensus mark in all the last four quarters, with the average being 68.2%. Earnings for the to-be-reported quarter are expected to grow 122.7% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.