Gibraltar Industries Continues with Inorganic Growth Strategy


On Jun 20, 2014, we issued an updated research report on Gibraltar Industries Inc. (ROCK). The company has been growing on the back of acquisitions. In Sep 2013, Gibraltar Industries acquired a product line which has been contributing to the quarterly results since then. It is keen on further acquisitions which can yield higher returns. 

We also expect higher revenues based on the company’s initiatives to strengthen its organic growth. Gibraltar Industries intends to reinvest its huge cash balance in business for achieving higher organic growth. Further, in the second quarter of 2014, the company shut down a plant and is in the process of consolidating two additional facilities, which are expected to reduce expenses by $1.5 million annually. 

Gibraltar Industries anticipates a rise in sales of Residential Products segment. A 20% year over year hike in sales is expected from growth in unit volume along with gains in postal products. The company is also set to benefit from the rise in residential repair and remodeling activities.

However, Gibraltar Industries is exposed to customer concentration risks as it derives a large portion of its sales from only a handful of customers. Furthermore, the company does not have long-term contracts with its clients. This can lead to severe loss in case of possible termination of the purchase contracts.

With a current market capitalization of $511.8 million, Gibraltar Industries sports a Zacks Rank #1 (Strong Buy). Other stocks worth a look in the industry include Simpson Manufacturing Co., Inc. (SSD), James Hardie Industries plc (JHX), The New Home Company LLC (NWHM). While Simpson Manufacturing carries the same Zacks Rank as Gibraltar Industries, James Hardie and The New Home Company hold a Zacks Rank #2 (Buy).

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