Let’s dig into the relative performance of AZEK (NYSE:AZEK) and its peers as we unravel the now-completed Q2 building materials earnings season.
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 8 building materials stocks we track reported a solid Q2. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was 2.9% above.
Stocks, especially growth stocks with cash flows further into the future, had a good end of 2023. On the other hand, this year has seen more volatile stock market swings due to mixed inflation data. However, building materials stocks have held steady amidst all this with share prices up 3.1% on average since the latest earnings results.
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 $434.4 million, up 12.1% year on year. This print exceeded analysts’ expectations by 9.5%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ organic revenue estimates.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Segment Results of Operations”Post (NYSE:POST) this CEO COMMENTS
AZEK achieved the biggest analyst estimates beat but had the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is up 12.2% since reporting and currently trades at $41.34.
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Best Q2: UFP (NASDAQ:UFPI) Beginning as a lumber supplier in the 1950s, UFP (NASDAQ:UFPI) makes a wide range of building materials for the construction, retail, and industrial sectors
UFP reported revenues of $1.90 billion, down 6.9% year on year, outperforming analysts’ expectations by 1.6%. It was a very strong quarter for the company with an impressive beat of analysts’ volume estimates and a decent beat of analysts’ operating margin estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 8.3% since reporting. It currently trades at $116.54.
Slowest Q2: Tecnoglass (NYSE:TGLS) The first-ever Colombian company to trade on the NASDAQ, Tecnoglass (NYSE:TGLS) is a manufacturer of architectural glass, windows, and aluminum products.
Tecnoglass reported revenues of $219.7 million, down 2.5% year on year, in line with analysts’ expectations. It was a mixed quarter for the company with full-year revenue guidance beating analysts’ expectations.
Interestingly, the stock is up 25.4% since the results and currently trades at $59.65.
Sherwin-Williams (NYSE:NYSE:SHW) Widely known for its success in the paint industry, Sherwin-Williams (NYSE:SHW) is a manufacturer of paints, coatings, and related products.
Sherwin-Williams reported revenues of $6.27 billion, flat year on year, in line with analysts’ expectations. Zooming out, it was a mixed quarter for the company with a miss of analysts’ organic revenue estimates.
Sherwin-Williams had the weakest performance against analyst estimates among its peers. The stock is up 1.1% since reporting and currently trades at $326.27.
Armstrong World (NYSE:AWI) Started as a two-man shop dating back to the 1860s, Armstrong (NYSE:AWI) provides ceiling and wall products to commercial and residential spaces.
Armstrong World reported revenues of $365.1 million, up 12.2% year on year, surpassing analysts’ expectations by 1.3%. Zooming out, it was a decent quarter for the company with full-year revenue guidance beating analysts’ expectations.
Armstrong World delivered the fastest revenue growth among its peers. The stock is down 5.4% since reporting and currently trades at $123.76.
This content was originally published on Stock Story
