Strong Buy on Gibraltar Industries

Zacks

Zacks Investment Research upgraded Gibraltar Industries, Inc. (ROCK) to a Zacks Rank #1 (Strong Buy) on March 19, 2013. The company with a market capitalization of roughly $555 million operates in the steel & iron industry and primarily manufactures and markets building products.

Why the Upgrade?

Financial results for the fourth quarter and year 2012 posted by Gibraltar Industries on February 22, 2013 were impressive. Net results in the quarter, adjusted for one-time items, were earnings of 5 cents per share, a drastic improvement over a 17 cent loss reported in the year-ago quarter. Compared with the Zacks Consensus Estimate of earnings per share of 3 cents, the results improved by 66.7%.

Talking of top line, Gibraltar Industries generated roughly $172.6 million in revenue, a slight decline of 0.9% from the year-ago quarter. Demand from infrastructural activities was strong in the quarter while softness was seen in the European automotive market and the oil & gas sector of North America.

Despite the poor revenue performance, a decline of 3.7% in cost of sales and 21.8% in selling, general and administrative expenses kept the momentum strong for Gibraltar Industries. Operating margin in the quarter came in at 4.0% compared with (2.5%) in the year-ago quarter.    

For 2013, management of Gibraltar Industries is hopeful about generating a better revenue and earnings on the back of lower cost structure, absence of restructuring charges, benefits from acquired assets and lower interest expenses.

Solid quarter results and optimistic outlook for 2013 helped push the earnings estimates for Gibraltar Industries. In the last 60 days, the Zacks Consensus Estimate for 2013 increased by 6.5% to 98 cents while that for 2014 the estimate went up 3.3% to $1.27. Also, we have an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of +9.2% for 2013.    

Other Stocks to Consider

Other stocks to watch out for in the industry are Shiloh Industries Inc. (SHLO), with a Zacks Rank #1 (Strong Buy) and Companhia Siderurgica Nacional (SID) and Kobe Steel Ltd. (KBSTY), each with a Zacks Rank #2 (Buy).
 

Read the Full Research Report on SID

Read the Full Research Report on SHLO

Read the Full Research Report on ROCK

Read the Full Research Report on KBSTY

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