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 UFP (NASDAQ:UFPI) and the rest of the building materials stocks fared in Q2.
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 satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 1.5% while next quarter’s revenue guidance was 2.9% above.
The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing 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.
Luckily, building materials stocks have performed well with share prices up 17.6% on average since the latest earnings results.
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 sectorsUFP reported revenues of $1.90 billion, down 6.9% year on year. This print exceeded analysts’ expectations by 1.6%. Overall, 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.
“Our second quarter results were in line with expectations in a more challenging business cycle, and I am grateful for the efforts of all of our UFP teammates to adapt to this environment and adjust capacity to meet demand,” said Chairman and CEO Matthew J. Missad.
UFP delivered the slowest revenue growth of the whole group. Interestingly, the stock is up 7% since reporting and currently trades at $136.
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Best Q2: 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, outperforming analysts’ expectations by 9.5%. The business had a very strong quarter with an impressive beat of analysts’ organic revenue estimates.
AZEK pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 18% since reporting. It currently trades at $43.45.
Weakest Q2: 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 $2.01 billion, down 4.7% year on year, falling short of analysts’ expectations by 1.2%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
Vulcan Materials delivered the weakest performance against analyst estimates in the group. The stock is flat since the results and currently trades at $258.40.
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 topped analysts’ expectations by 3.6%. It was a strong quarter as it also produced revenue guidance for next quarter exceeding analysts’ expectations and a decent beat of analysts’ ADI Global Distribution revenue estimates.
Resideo delivered the highest full-year guidance raise among its peers. The stock is up 13.3% since reporting and currently trades at $21.78.
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 $1.45 billion, up 11% year on year. This number met analysts’ expectations. Overall, it was a strong quarter as it also logged an impressive beat of analysts’ operating margin estimates and a decent beat of analysts’ earnings estimates.
The stock is up 14.6% since reporting and currently trades at $472.55.
This content was originally published on Stock Story
