Wrapping up Q2 earnings, we look at the numbers and key takeaways for the home construction materials stocks, including American Woodmark (NASDAQ:AMWD) and its peers.
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 12 home construction materials stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 2.4% while next quarter’s revenue guidance was 22.9% below.
Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
In light of this news, home construction materials stocks have held steady with share prices up 4.4% on average since the latest earnings results.
American Woodmark (NASDAQ:AMWD)
Starting as a small millwork shop, American Woodmark (NASDAQ:AMWD) is a cabinet manufacturing company that helps customers from inspiration to installation.American Woodmark reported revenues of $459.1 million, down 7.9% year on year. This print fell short of analysts’ expectations by 3.4%. Overall, it was a softer quarter for the company with a miss of analysts’ earnings estimates.
“Our team delivered net sales growth in the new construction market, but this was more than offset by weaker than projected demand in the remodel market,” said Scott Culbreth, President and CEO.
Unsurprisingly, the stock is down 9.2% since reporting and currently trades at $90.67.
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Best Q2: JELD-WEN (NYSE:JELD)
Founded in the 1960s as a general wood-making company, JELD-WEN (NYSE:JELD) manufactures doors, windows, and other related building products.JELD-WEN reported revenues of $986 million, down 12.4% year on year, falling short of analysts’ expectations by 1.4%. However, the business still had a very strong quarter with an impressive beat of analysts’ organic revenue estimates and an impressive beat of analysts’ earnings estimates.
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $14.68.
Weakest Q2: Gibraltar (NASDAQ:ROCK)
Gibraltar (NASDAQ:ROCK) makes renewable energy, agriculture technology and infrastructure products. Its mission statement is to make everyday living more sustainable.Gibraltar reported revenues of $353 million, down 3.3% year on year, falling short of analysts’ expectations by 5.5%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
As expected, the stock is down 16.9% since the results and currently trades at $66.68.
Hayward (NYSE:HAYW)
Credited with introducing the first variable-speed pool pump, Hayward (NYSE:HAYW) makes residential and commercial pool equipment and accessories.Hayward reported revenues of $284.4 million, flat year on year. This print met analysts’ expectations. More broadly, it was a mixed quarter with a miss of analysts’ organic revenue estimates.
The stock is up 8.1% since reporting and currently trades at $14.58.
Quanex (NYSE:NX)
Starting in the seamless tube industry, Quanex (NYSE:NX) manufactures building products like window, door, kitchen, and bath cabinet components.Quanex reported revenues of $280.3 million, down 6.4% year on year. This result was in line with analysts’ expectations. It was a strong quarter as it also recorded a decent beat of analysts’ operating margin estimates.
Quanex scored the biggest analyst estimates beat and highest full-year guidance raise among its peers. The stock is up 11.5% since reporting and currently trades at $27.71.
This content was originally published on Stock Story
