As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the building materials industry, including Carlisle (NYSE:CSL) and its peers.
Traditionally, building materials companies have built competitive advantages with economies of scale, brand recognition, and strong relationships with builders and contractors. More recently, advances to address labor availability and job site productivity have spurred innovation. Additionally, companies in the space that can produce more energy-efficient materials have opportunities to take share. However, these companies are at the whim of 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 building materials companies.
The 9 building materials stocks we track reported a slower Q3. As a group, revenues missed analysts’ consensus estimates by 1% while next quarter’s revenue guidance was 2.8% above.
Thankfully, share prices of the companies have been resilient as they are up 5.2% on average since the latest earnings results.
Carlisle (NYSE:CSL)
Originally founded as Carlisle Tire and Rubber Company, Carlisle Companies (NYSE:CSL) is a multi-industry product manufacturer focusing on construction materials and weatherproofing technologies.Carlisle reported revenues of $1.33 billion, up 5.9% year on year. This print fell short of analysts’ expectations by 3.3%. Overall, it was a softer quarter for the company with a significant miss of analysts’ organic revenue and EBITDA estimates.
Unsurprisingly, the stock is down 10.9% since reporting and currently trades at $408.85.
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Best Q3: AZEK (NYSE:AZEK)
With a significant portion of its products made from recycled materials, AZEK (NYSE:AZEK) designs and manufactures goods for outdoor living spaces.AZEK reported revenues of $348.2 million, down 10.4% year on year, outperforming analysts’ expectations by 2.4%. The business had a strong quarter with a solid beat of analysts’ adjusted operating income and organic revenue estimates.
AZEK delivered the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 13.7% since reporting. It currently trades at $52.84.
Weakest Q3: UFP Industries (NASDAQ:UFPI)
Beginning as a lumber supplier in the 1950s, UFP Industries (NASDAQ:UFPI) is a holding company making building materials for the construction, retail, and industrial sectors.UFP Industries reported revenues of $1.65 billion, down 9.8% year on year, falling short of analysts’ expectations by 6.5%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
UFP Industries delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 7.2% since the results and currently trades at $122.04.
Vulcan Materials (NYSE:VMC)
Founded in 1909, Vulcan Materials (NYSE:VMC) is a producer of construction aggregates, primarily crushed stone, sand, and gravel.Vulcan Materials reported revenues of $2.00 billion, down 8.3% year on year. This print lagged analysts' expectations by 0.8%. It was a softer quarter as it also produced a miss of analysts’ EPS estimates and full-year EBITDA guidance missing analysts’ expectations.
The stock is up 5.1% since reporting and currently trades at $272.65.
Valmont (NYSE:VMI)
Credited with an invention in the 1950s that improved crop yields, Valmont (NYSE:VMI) provides engineered products and infrastructure services for the agricultural industry.Valmont reported revenues of $1.02 billion, down 2.9% year on year. This result was in line with analysts’ expectations. Taking a step back, it was a mixed quarter as it also logged a decent beat of analysts’ EBITDA estimates.
The stock is up 11.6% since reporting and currently trades at $328.73.
Market Update
In response to the Fed's rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed's 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.Want to invest in winners with rock-solid fundamentals? Check out our and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
This content was originally published on Stock Story
