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Why Is Beacon Roofing (BECN) Up 30.7% Since Last Earnings Report?
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It has been about a month since the last earnings report for Beacon Roofing Supply (BECN - Free Report) . Shares have added about 30.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Beacon Roofing due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Beacon Roofing Q2 Loss In Line, Margins Increase Y/Y
Beacon Roofing Supply, Inc. reported second-quarter fiscal 2020 results, wherein the bottom line met the Zacks Consensus Estimate and improved from the prior-year quarter. The improved results were mainly backed by strong sales (particularly until mid-March), stable margins and cost-control measures.
Despite being declared an essential business in all markets served, the company witnessed significant disruption post the declaration of the coronavirus outbreak as pandemic in mid-March. In April, daily sales declined nearly 20% from the prior-year period.
Nonetheless, it is looking for opportunities to improve productivity and enhance customer service through its industry-leading digital platform. Also, the company has implemented various cost-saving actions in response to the COVID-19 outbreak.
Quarter in Detail
Beacon Roofing reported adjusted loss of 27 cents per share, narrower than the year-ago loss of 45 cents per share.
Net sales of $1.46 billion marginally surpassed the consensus mark of $1.45 billion. The figure also grew 2.1% year over year, backed by certain contractor conversion initiatives, national account sales and continued support from industry-leading digital platform. However, these positives were partially offset by comparatively lower hurricane-related demand.
Residential roofing product sales and complementary product sales declined 1.3% and 0.4%, respectively. However, non-residential roofing product sales improved 2.6% year over year.
Daily sales were up 0.5% year over year. The metric was up 5% year over year before the COVID-19 outbreak in mid-March. Non-residential roofing daily sales grew 10.8% from the prior year.
Operating Highlights
Cost of goods sold (contributing 76.5% to net sales) totaled $1,116.1 million, up 2% year over year. Gross margin expanded 10 basis points (bps) to 23.5%.
Adjusted EBITDA surged 42% year over year and margin grew 80 bps to 2.7%, reflecting strong operating cost-control measures.
Segment Details
Sales in the Residential roofing product segment (contributing 40.5% to total sales) fell 1.3% year over year to $591.2 million. That in Complementary products (35.3%) slipped 0.4% year over year to $514.3 million. Nonetheless, sales in the Non-residential roofing product unit (24.2%) increased 12.6% year over year to $353 million.
Cash Position
As of Mar 31, 2020, Beacon Roofing had cash and cash equivalents of $781.2 million, significantly up from $72.3 million at fiscal 2019-end. Long-term debt was $2.5 billion, almost in line with the last reported quarter and the year-ago figure.
Cash used in operations was reported at $150.8 million in the first six months of fiscal 2020 compared with $242.1 million a year ago.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -42.96% due to these changes.
VGM Scores
At this time, Beacon Roofing has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Beacon Roofing has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Beacon Roofing (BECN) Up 30.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Beacon Roofing Supply (BECN - Free Report) . Shares have added about 30.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Beacon Roofing due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Beacon Roofing Q2 Loss In Line, Margins Increase Y/Y
Beacon Roofing Supply, Inc. reported second-quarter fiscal 2020 results, wherein the bottom line met the Zacks Consensus Estimate and improved from the prior-year quarter. The improved results were mainly backed by strong sales (particularly until mid-March), stable margins and cost-control measures.
Despite being declared an essential business in all markets served, the company witnessed significant disruption post the declaration of the coronavirus outbreak as pandemic in mid-March. In April, daily sales declined nearly 20% from the prior-year period.
Nonetheless, it is looking for opportunities to improve productivity and enhance customer service through its industry-leading digital platform. Also, the company has implemented various cost-saving actions in response to the COVID-19 outbreak.
Quarter in Detail
Beacon Roofing reported adjusted loss of 27 cents per share, narrower than the year-ago loss of 45 cents per share.
Net sales of $1.46 billion marginally surpassed the consensus mark of $1.45 billion. The figure also grew 2.1% year over year, backed by certain contractor conversion initiatives, national account sales and continued support from industry-leading digital platform. However, these positives were partially offset by comparatively lower hurricane-related demand.
Residential roofing product sales and complementary product sales declined 1.3% and 0.4%, respectively. However, non-residential roofing product sales improved 2.6% year over year.
Daily sales were up 0.5% year over year. The metric was up 5% year over year before the COVID-19 outbreak in mid-March. Non-residential roofing daily sales grew 10.8% from the prior year.
Operating Highlights
Cost of goods sold (contributing 76.5% to net sales) totaled $1,116.1 million, up 2% year over year. Gross margin expanded 10 basis points (bps) to 23.5%.
Adjusted EBITDA surged 42% year over year and margin grew 80 bps to 2.7%, reflecting strong operating cost-control measures.
Segment Details
Sales in the Residential roofing product segment (contributing 40.5% to total sales) fell 1.3% year over year to $591.2 million. That in Complementary products (35.3%) slipped 0.4% year over year to $514.3 million. Nonetheless, sales in the Non-residential roofing product unit (24.2%) increased 12.6% year over year to $353 million.
Cash Position
As of Mar 31, 2020, Beacon Roofing had cash and cash equivalents of $781.2 million, significantly up from $72.3 million at fiscal 2019-end. Long-term debt was $2.5 billion, almost in line with the last reported quarter and the year-ago figure.
Cash used in operations was reported at $150.8 million in the first six months of fiscal 2020 compared with $242.1 million a year ago.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -42.96% due to these changes.
VGM Scores
At this time, Beacon Roofing has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Beacon Roofing has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.