Let’s dig into the relative performance of Simpson (NYSE:SSD) and its peers as we unravel the now-completed Q2 home construction materials earnings season.
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.
Stocks, especially growth stocks with cash flows further into the future, had a good end of 2023. On the other hand, this year has seen more volatile stock market swings due to mixed inflation data. However, home construction materials stocks have held steady amidst all this with share prices up 4.8% on average since the latest earnings results.
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 $597 million, flat year on year. This print fell short of analysts’ expectations by 1.3%. Overall, it was a disappointing quarter for the company with a miss of analysts’ earnings estimates.
"Our net sales of $597.0 million were in-line with the prior year quarter in a continued challenging housing market in both the U.S. and Europe," commented Mike Olosky, President and Chief Executive Officer of Simpson Manufacturing Co.,
Interestingly, the stock is up 2% since reporting and currently trades at $184.51.
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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 and earnings estimates.
The market seems content with the results as the stock is up 2.5% since reporting. It currently trades at $15.04.
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 11.2% since the results and currently trades at $71.24.
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 $376.5 million, up 5.6% year on year. This result missed analysts’ expectations by 2.9%. It was a softer quarter as it also logged revenue guidance for next quarter missing analysts’ expectations.
Trex had the weakest full-year guidance update among its peers. The stock is down 11.4% since reporting and currently trades at $67.86.
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 logged a solid beat of analysts’ Cabinet Components revenue estimates and 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 13.3% since reporting and currently trades at $28.16.
This content was originally published on Stock Story
