Let’s dig into the relative performance of Vulcan Materials (NYSE:VMC) and its peers as we unravel the now-completed Q3 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 9 building materials stocks we track reported a slower Q3. As a group, revenues missed analysts’ consensus estimates by 1% while next quarter’s revenue guidance was 2.8% above.
While some building materials stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.1% since the latest earnings results.
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 $2.00 billion, down 8.3% year on year. This print fell short of analysts’ expectations by 0.8%. Overall, it was a softer quarter for the company with a miss of analysts’ EPS estimates and full-year EBITDA guidance missing analysts’ expectations.
Tom Hill, Vulcan Materials' Chairman and Chief Executive Officer, said, "Results and activities in the third quarter evidence the consistent execution of our two-pronged strategy to generate durable growth. We continue to enhance our core through expansion of our industry-leading aggregates cash gross profit per ton, which increased 10 percent in the third quarter and has grown by double-digits for eight consecutive quarters. We also recently announced the acquisition of Wake Stone Corporation, a leading pure-play aggregates producer, that will expand our reach in high-growth geographies in the Carolinas. Our Vulcan Way of Selling and Vulcan Way of Operating disciplines remain fundamental to compounding profitability across our franchise and successfully integrating new operations. "
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $257.13.
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Best Q3: 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 $348.2 million, down 10.4% year on year, outperforming analysts’ expectations by 2.4%. The business had a strong quarter with an impressive beat of analysts’ adjusted operating income estimates and a solid beat of analysts’ organic revenue estimates.
AZEK scored the biggest analyst estimates beat among its peers. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $46.20.
Weakest Q3: UFP Industries (NASDAQ:UFPI)
Beginning as a lumber supplier in the 1950s, UFP Industries (NASDAQ:UFPI) is a holding company making building materials for the construction, retail, and industrial sectors.UFP Industries reported revenues of $1.65 billion, down 9.8% year on year, falling short of analysts’ expectations by 6.5%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
UFP Industries delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 15.3% since the results and currently trades at $111.44.
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 $6.16 billion, flat year on year. This result missed analysts’ expectations by 0.6%. Overall, it was a softer quarter as it also recorded a significant miss of analysts’ adjusted operating income estimates.
The stock is down 11.7% since reporting and currently trades at $336.98.
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 $386.6 million, up 11.3% year on year. This number was in line with analysts’ expectations. Aside from that, it was a satisfactory quarter as it also logged EPS guidance for next quarter exceeding analysts’ expectations.
Armstrong World had the weakest full-year guidance update among its peers. The stock is up 3.5% since reporting and currently trades at $142.08.
Market Update
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This content was originally published on Stock Story
