We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Should You Steer Clear of BCC Stock on Gloomy Near-Term Prospects?
Read MoreHide Full Article
Shares of Boise Cascade Company (BCC - Free Report) have gained 2.6% in the past three months against the Zacks Building Products - Wood industry’s 0.5% decline. Although the company’s shares have outperformed the industry, softer housing demand trends (mainly multi-family starts), inflated cost and expense structure and product pricing fluctuations might pull back the stock performance in the near term.
Image Source: Zacks Investment Research
Given the ongoing uncertain macroeconomic scenario, Boise Cascade expects this trend to continue in the near term until potential rate cuts. The ongoing challenges are also reflected in the estimate revision trend discussed hereafter.
The Zacks Consensus Estimate for this Zacks Rank #4 (Sell) company’s 2024 earnings has trended downward in the past 30 days to $9.76 per share from $10.41. The estimated figure indicates a decline of 19.5% from the figure reported a year ago. The consensus estimate for the third quarter also moved south to $2.39 per share from $2.94 during the same time frame, indicating a 33.2% year-over-year decline.
EPS Estimate Trend
Image Source: Zacks Investment Research
Let us discuss the factors that highlight why investors must stay away from the stock for now.
Factors Impacting BCC Stock
Softer Multi-Family Housing Starts: The demand for Boise Cascade’s products is strongly related to the level of new residential construction, residential repair-and-remodeling activity and light commercial construction. The housing industry is cyclical and is affected by consumer confidence levels, prevailing economic conditions and interest rates.
Currently, the housing starts in the United States are on the softer side because multi-family starts are trailing behind the single-family starts. The decline in multi-family starts is mainly driven by increased capital costs for developers and existing housing inventory. Also, ongoing economic uncertainties and high mortgage rates are influencing the near-term demand environment for the products manufactured and distributed by BCC.
Product Pricing Risks: The prices of a significant portion of BCC’s manufactured and purchased products, along with key production inputs, are hinged on market dynamics of supply and demand. Fluctuations in these prices wield a substantial impact on the its financial performance, affecting both selling prices and key costs.
Boise Cascade has been witnessing pricing pressures in the market for some time. These pressures are reflected by the weak pricing across its engineered wood products (EWP), including I-joists and laminated veneer lumber (LVL), along with plywood. During the second quarter of 2024, the pricing for I-joists and LVL sequentially declined 3% and 2%, respectively, due to the current market pressures. For EWP, the company expects pricing to decline in the low single digits sequentially in the third quarter.
Increased Cost & Expenses: Boise Cascade is facing headwinds in the form of inflated raw materials, labor and manufacturing costs, along with increasing selling, general and administrative expenses.
During the first six months of 2024, the company’s costs and expenses increased year over year by 2.5%. In the same period, costs and expenses – as a percentage of total sales – increased 140 bps year over year to 91.9%. During the same time frame, selling and distribution expenses – as a percentage of revenues – increased to 8.5% from 8% reported a year ago. BCC is likely to be affected by higher manufacturing and input costs and other price inflations for some time. (read more: Boise Cascade Q2 Earnings & Sales Top Estimates, Down Y/Y)
Key Picks
Here are some better-ranked stocks from the Construction sector.
FIX delivered a trailing four-quarter earnings surprise of 20.6%, on average. The stock has surged 90.1% in the past year. The Zacks Consensus Estimate for FIX’s 2024 sales and earnings per share (EPS) indicates growth of 29.4% and 50.9%, respectively, from the prior-year levels.
Century Communities, Inc. (CCS - Free Report) currently carries a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 35.6%, on average. Shares of CCS gained 31.6% in the past year.
The consensus estimate for CCS’ 2024 sales and EPS implies an increase of 18.1% and 32.5%, respectively, from the prior-year levels.
Frontdoor, Inc. (FTDR - Free Report) presently sports a Zacks Rank of 1. FTDR delivered a trailing four-quarter earnings surprise of 279%, on average. The stock has risen 44.5% in the past year.
The Zacks Consensus Estimate for FTDR’s 2024 sales and EPS indicates an increase of 3% and 18.7%, respectively, from a year ago.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Should You Steer Clear of BCC Stock on Gloomy Near-Term Prospects?
Shares of Boise Cascade Company (BCC - Free Report) have gained 2.6% in the past three months against the Zacks Building Products - Wood industry’s 0.5% decline. Although the company’s shares have outperformed the industry, softer housing demand trends (mainly multi-family starts), inflated cost and expense structure and product pricing fluctuations might pull back the stock performance in the near term.
Image Source: Zacks Investment Research
Given the ongoing uncertain macroeconomic scenario, Boise Cascade expects this trend to continue in the near term until potential rate cuts. The ongoing challenges are also reflected in the estimate revision trend discussed hereafter.
The Zacks Consensus Estimate for this Zacks Rank #4 (Sell) company’s 2024 earnings has trended downward in the past 30 days to $9.76 per share from $10.41. The estimated figure indicates a decline of 19.5% from the figure reported a year ago. The consensus estimate for the third quarter also moved south to $2.39 per share from $2.94 during the same time frame, indicating a 33.2% year-over-year decline.
EPS Estimate Trend
Image Source: Zacks Investment Research
Let us discuss the factors that highlight why investors must stay away from the stock for now.
Factors Impacting BCC Stock
Softer Multi-Family Housing Starts: The demand for Boise Cascade’s products is strongly related to the level of new residential construction, residential repair-and-remodeling activity and light commercial construction. The housing industry is cyclical and is affected by consumer confidence levels, prevailing economic conditions and interest rates.
Currently, the housing starts in the United States are on the softer side because multi-family starts are trailing behind the single-family starts. The decline in multi-family starts is mainly driven by increased capital costs for developers and existing housing inventory. Also, ongoing economic uncertainties and high mortgage rates are influencing the near-term demand environment for the products manufactured and distributed by BCC.
Product Pricing Risks: The prices of a significant portion of BCC’s manufactured and purchased products, along with key production inputs, are hinged on market dynamics of supply and demand. Fluctuations in these prices wield a substantial impact on the its financial performance, affecting both selling prices and key costs.
Boise Cascade has been witnessing pricing pressures in the market for some time. These pressures are reflected by the weak pricing across its engineered wood products (EWP), including I-joists and laminated veneer lumber (LVL), along with plywood. During the second quarter of 2024, the pricing for I-joists and LVL sequentially declined 3% and 2%, respectively, due to the current market pressures. For EWP, the company expects pricing to decline in the low single digits sequentially in the third quarter.
Increased Cost & Expenses: Boise Cascade is facing headwinds in the form of inflated raw materials, labor and manufacturing costs, along with increasing selling, general and administrative expenses.
During the first six months of 2024, the company’s costs and expenses increased year over year by 2.5%. In the same period, costs and expenses – as a percentage of total sales – increased 140 bps year over year to 91.9%. During the same time frame, selling and distribution expenses – as a percentage of revenues – increased to 8.5% from 8% reported a year ago. BCC is likely to be affected by higher manufacturing and input costs and other price inflations for some time. (read more: Boise Cascade Q2 Earnings & Sales Top Estimates, Down Y/Y)
Key Picks
Here are some better-ranked stocks from the Construction sector.
Comfort Systems USA, Inc. (FIX - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
FIX delivered a trailing four-quarter earnings surprise of 20.6%, on average. The stock has surged 90.1% in the past year. The Zacks Consensus Estimate for FIX’s 2024 sales and earnings per share (EPS) indicates growth of 29.4% and 50.9%, respectively, from the prior-year levels.
Century Communities, Inc. (CCS - Free Report) currently carries a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 35.6%, on average. Shares of CCS gained 31.6% in the past year.
The consensus estimate for CCS’ 2024 sales and EPS implies an increase of 18.1% and 32.5%, respectively, from the prior-year levels.
Frontdoor, Inc. (FTDR - Free Report) presently sports a Zacks Rank of 1. FTDR delivered a trailing four-quarter earnings surprise of 279%, on average. The stock has risen 44.5% in the past year.
The Zacks Consensus Estimate for FTDR’s 2024 sales and EPS indicates an increase of 3% and 18.7%, respectively, from a year ago.