The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how home construction materials stocks fared in Q3, starting with Fortune Brands (NYSE:FBIN).
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 mixed Q3. As a group, revenues missed analysts’ consensus estimates by 0.9%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 9.9% since the latest earnings results.
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 $1.16 billion, down 8.4% year on year. This print fell short of analysts’ expectations by 6.9%. Overall, it was a softer quarter for the company with a miss of analysts’ organic revenue and EPS estimates.
Fortune Brands delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 17.1% since reporting and currently trades at $69.84.
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Best Q3: 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 $233.7 million, down 23.1% year on year, outperforming analysts’ expectations by 3.7%. The business had an exceptional quarter with an impressive beat of analysts’ EBITDA estimates.
Trex scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 6.9% since reporting. It currently trades at $71.11.
Weakest Q3: 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 $934.7 million, down 13.2% year on year, falling short of analysts’ expectations by 5.6%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations.
JELD-WEN delivered the weakest full-year guidance update in the group. As expected, the stock is down 40.9% since the results and currently trades at $8.36.
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 $492.2 million, up 66.6% year on year. This print was in line with analysts’ expectations. Overall, it was a very strong quarter as it also put up an impressive beat of analysts’ EBITDA estimates.
Quanex pulled off the fastest revenue growth among its peers. The stock is down 13% since reporting and currently trades at $25.18.
Simpson (NYSE:SSD)
Aiming to build safer and stronger buildings, Simpson (NYSE:SSD) designs and manufactures structural connectors, anchors, and other construction products.Simpson reported revenues of $587.2 million, up 1.2% year on year. This number met analysts’ expectations. Zooming out, it was a disappointing quarter as it recorded a significant miss of analysts’ EBITDA and EPS estimates.
The stock is down 9.9% since reporting and currently trades at $167.80.
Market Update
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.Want to invest in winners with rock-solid fundamentals? Check out our and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
This content was originally published on Stock Story
