The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Griffon (NYSE:GFF) and the rest of the home construction materials stocks fared in Q1.
Traditionally, home construction materials companies have built economic moats with expertise in specialized areas, brand recognition, and strong relationships with contractors. More recently, advances to address labor availability and job site productivity have spurred innovation that is driving incremental demand. However, these companies are at the whim of residential 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 home construction materials companies.
The 11 home construction materials stocks we track reported an ok Q1; on average, revenues were in line with analyst consensus estimates. while next quarter's revenue guidance was 2.3% above consensus. Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. The start of 2024 has been a different story as mixed signals have led to market volatility, and home construction materials stocks have had a rough stretch, with share prices down 8.3% on average since the previous earnings results.
Best Q1: Griffon (NYSE:GFF) Initially in the defense industry, Griffon (NYSE:GFF) is a now diversified company specializing in home improvement, professional equipment, and building products.
Griffon reported revenues of $672.9 million, down 5.4% year on year, exceeding analysts' expectations by 7.6%. Overall, it was an incredible quarter for the company with an impressive beat of analysts' earnings estimates.
“Griffon’s excellent second quarter performance exceeded our expectations due to the strength of residential volume in our Home and Building Products ("HBP") segment," said Ronald J. Kramer, Chairman and Chief Executive Officer.
Griffon achieved the biggest analyst estimates beat of the whole group. The stock is down 5.8% since reporting and currently trades at $63.84.
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Fortune Brands (NYSE:FBIN) Targeting a wide customer base of residential and commercial customers, Fortune Brands (NYSE:FBIN) makes plumbing, security, and outdoor living products.
Fortune Brands reported revenues of $1.11 billion, up 6.7% year on year, outperforming analysts' expectations by 2.7%. It was an exceptional quarter for the company with an impressive beat of analysts' organic revenue estimates and a decent beat of analysts' earnings estimates.
Although it had a great quarter compared its peers, the market seems unhappy with the results as the stock is down 11.3% since reporting. It currently trades at $64.84.
Weakest Q1: Masonite (NYSE:DOOR) A company that has specialized in making doors for an entire century, Masonite (NYSE:DOOR) designs and manufactures indoor and outdoor doors for residential and commercial markets.
Masonite reported revenues of $668.3 million, down 7.9% year on year, falling short of analysts' expectations by 6.5%. It was a weak quarter for the company with a miss of analysts' earnings and volume estimates.
Masonite had the weakest performance against analyst estimates in the group. The stock is flat since the results and currently trades at $133.02.
Masco (NYSE:MAS) Headquartered just outside of Detroit, MI, Masco (NYSE:MAS) designs and manufactures home-building products such as glass shower doors, decorative lighting, bathtubs, and faucets.
Masco reported revenues of $1.93 billion, down 2.7% year on year, in line with analysts' expectations. More broadly, it was a slower quarter for the company with a miss of analysts' organic revenue estimates.
The stock is down 5.2% since reporting and currently trades at $69.22.
Trex (NYSE:TREX) Addressing the demand for aesthetically-pleasing and unique outdoor living spaces, Trex Company (NYSE:TREX) makes wood-alternative decking, railing, and patio furniture.
Trex reported revenues of $373.6 million, up 56.5% year on year, surpassing analysts' expectations by 1.7%. Taking a step back, it was a strong quarter for the company with an impressive beat of analysts' organic revenue estimates and a solid beat of analysts' earnings estimates.
Trex scored the fastest revenue growth among its peers. The stock is down 16.1% since reporting and currently trades at $78.38.
This content was originally published on Stock Story
