Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Resideo (NYSE:REZI) and the best and worst performers in the building materials industry.
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 decent Q2. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was 2.9% above.
Inflation progressed towards the Fed’s 2% goal at the end of 2023, leading to strong stock market performance. On the other hand, 2024 has been a bumpier ride as the market switches between optimism and pessimism around rate cuts and inflation. However, building materials stocks have held steady amidst all this with share prices up 2.1% on average since the latest earnings results.
Resideo (NYSE:REZI) Resideo Technologies, Inc. (NYSE: REZI) is a manufacturer and distributor of technology-driven products and solutions for home comfort, energy management, water management, and safety and security.
Resideo reported revenues of $1.59 billion, flat year on year. This print exceeded analysts’ expectations by 3.6%. Overall, it was a very strong quarter for the company with revenue guidance for next quarter exceeding analysts’ expectations and optimistic EBITDA guidance for the full year.
"Our second quarter results demonstrated the substantial progress we have made in transforming the structural profitability profile of the business and in executing on value creating strategic transactions," commented Jay Geldmacher, Resideo's President and CEO.
Resideo scored the highest full-year guidance raise of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts' consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 4.1% since reporting and currently trades at $18.43.
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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 narrow beat of analysts’ earnings estimates .
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 7.1% since reporting. It currently trades at $118.
Sherwin-Williams (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. It was a slower quarter for the company with a miss of analysts’ organic revenue estimates.
Sherwin-Williams posted the weakest performance against analyst estimates in the group. Interestingly, the stock is up 9.2% since the results and currently trades at $352.15.
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%. Revenue aside, it was a mixed quarter for the company with full-year revenue guidance beating analysts’ expectations but a miss of analysts’ earnings estimates.
Armstrong World achieved the fastest revenue growth among its peers. The stock is down 8.5% since reporting and currently trades at $119.62.
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, surpassing analysts’ expectations by 9.5%. 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.
AZEK pulled off the biggest analyst estimates beat but had the weakest full-year guidance update among its peers. The stock is up 9.3% since reporting and currently trades at $40.24.
This content was originally published on Stock Story
