6 Reasons to Invest in Beacon Roofing (BECN) Stock Right Now
Beacon Roofing Supply, Inc. BECN has been performing well of late. Solid performance in fiscal 2017 and focus on growth through acquisitions have provided a boost to its shares. The company's pending acquisition of Allied Building Products for $2.625 billion will catapult it to the position of one of the largest public wholesale building materials distributors in North America. The company is also anticipated to benefit from the rebuilding activity triggered by the two back-to-back hurricanes Harvey and Irma.
We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and poised to carry the momentum ahead.
What’s Working in Favor of Beacon Roofing?
Favorable Zacks Rank: Beacon Roofing sports a Zacks Rank #1 (Strong Buy) with an impressive Zacks VGM Score of A. Here V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of these three scores (Value - B, Growth - A, Momentum - B). Such a score allows you to eliminate the negative aspects of stocks and select winners. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 offer the best upside potential.
Price Performance: The company’s share price has gained 32.3% year to date, outperforming the industry’s gain of 29.4%.
Healthy Growth Prospects: The Zacks Consensus Estimate for earnings for fiscal 2018 is pegged at $3.08, depicting year-over-year growth of 41.3%. The estimate for fiscal 2019 of $3.83 reflects year-over-year growth of 24.2%.
The stock has an estimated long-term earnings growth rate of 25%.
Positive Earnings Surprise History: Beacon Roofing has outpaced the Zacks Consensus Estimate in two of the trailing four quarters, delivering a positive average earnings surprise of 6.40%.
Upbeat Q4 Results: Beacon Roofing reported adjusted earnings of 93 cents per share for fourth-quarter fiscal 2017, falling behind the Zacks Consensus Estimate of 94 cents. Earnings increased 6% on a year-over-year basis, driven by strong sales growth within each of the three product lines — residential roofing, non-residential roofing and complementary products. Further, it was aided by strong organic sales trends across the majority of geographies.
Growth Drivers: Beacon Roofing will benefit from strong sales growth within the three product lines in fiscal 2018. The Complementary products segment is expected to be the strongest performing segment in 2018 given conducive conditions. The company is focused to grow this category, both organically and through acquisitions. It is a very large and growing market, and one of the elements that is expected to fuel growth moving forward. Both commercial and residential roofing is anticipated to go up in fiscal 2018.The company is also expected to benefit from the rebuilding activity triggered by the back-to-back hurricanes.
Through the pending Allied Building acquisition, Beacon Roofing would mark its foray in local markets in the New York, New Jersey and Upper Midwest. With projected revenues of roughly $7 billion from the combined company, it will be an increase of 69% in the company's annual revenues from current levels. It will also add about 50-60 cents to earnings per share in the first year. The combined company is anticipated to realize $110 million in run-rate synergies within two years of the closure of the deal. In addition to growth through acquisitions, the company also remains focused on attaining organic growth.
Other Stocks to Consider
Some other top-ranked stocks worth considering in the sector include Rush Enterprises, Inc. RUSHA, PetMed Express, Inc. PETS and Famous Dave's of America, Inc. DAVE. All the three stocks carry a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Rush Enterprises has an estimated long-term earnings growth of 15%. Its shares have rallied 53% year to date.
PetMed Express has an estimated long term earnings growth of 10%. Its shares have surged 89% year to date.
Famous Dave's of America has an estimated long term earnings growth of 20%. Its shares have gained 37% year to date.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
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Rush Enterprises, Inc. (RUSHA) : Free Stock Analysis Report
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