AZEK to Report Solid Q4 Earnings on Strong Residential Unit
The AZEK Company Inc. AZEK is slated to release fourth-quarter fiscal 2023 results on Nov 28, after market close.
In the last reported quarter, the company’s earnings topped the Zacks Consensus Estimate by 15.4% and sales beat the same by 4%. On a year-over-year basis, the bottom line increased by 3.4%, but the top line declined by 1.9%.
AZEK’s earnings topped the consensus mark in 11 of the last 12 quarters and missed on one occasion.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings remained stable at 30 cents in the past 60 days. The estimated figure indicates an increase of 87.5% from the year-ago earnings of 16 cents per share.
The AZEK Company Inc. Price and EPS Surprise
The AZEK Company Inc. price-eps-surprise | The AZEK Company Inc. Quote
The consensus mark for revenues is pegged at $370.76 million, suggesting 21.7% year-over-year growth.
Factors to Note
AZEK’s top and bottom lines are likely to have witnessed growth in the to-be-reported quarter, backed by positive Residential sell-through demand, operational excellence, sourcing savings and recycling initiatives and lower raw material costs.
The company’s focus on new product enhancement, material conversion and customer expansion bodes well. This is likely to have added benefits for the company’s fiscal fourth-quarter results.
Acquisitions have also been a vital part of AZEK’s strategy. It is one of the preferred modes of solidifying the product portfolio and leveraging new business opportunities and, thereby, revenues.
AZEK’s industry-leading position, focus on strategic growth initiatives and significant margin expansion opportunities are expected to have helped it gain robustly in the fiscal fourth quarter. The improved visibility of the Residential segment is a bonus for the company’s fiscal fourth-quarter performance.
The company expects net sales to be in the range of $356-$376 million versus $304.6 million reported a year ago. It anticipates the Commercial segment’s net sales to remain soft.
Adjusted EBITDA is likely to be $90-$95 million, impressively up from $65.1 million a year ago. Meanwhile, the company is improving production levels sequentially to align more closely with market demand.
The Zacks Consensus Estimate for the Residential segment’s net sales is pegged at $329 million, significantly up from the $254.2 million reported in the previous year. The same for segment-adjusted EBITDA is likely to be up 53.8% year over year.
The Zacks Consensus Estimate for the Commercial segment is pinned at $39.19 million, down from $50.4 million reported a year ago. The same for segment-adjusted EBITDA is projected to decline 35.1% from the prior year.
The company’s services are subject to seasonal changes. The company’s first quarter of each fiscal year is disproportionately affected by adverse weather conditions in certain residential product markets, which typically reduces construction and renovation activity during the winter season. Price pressure on raw materials is an additional concern.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for AZEK this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here.
The stock has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
AZEK currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Recent Construction Releases
Watsco, Inc. WSO reported better-than-expected third-quarter 2023 results, with earnings and revenues topping the Zacks Consensus Estimate.
Watsco delivered record sales and EPS, driven by solid HVAC equipment sales growth, improved residential unit volumes and strong price realization. Also, the commercial end markets remained healthy in the quarter.
Armstrong World Industries, Inc. AWI reported better-than-expected results for third-quarter 2023, wherein earnings and net sales topped the Zacks Consensus Estimate. Also, both metrics increased on a year-over-year basis.
Despite the challenging macroeconomic conditions, AWI delivered strong results attributable to its diversified end markets, consistent Mineral Fiber average unit value growth and appealing growth initiatives.
Otis Worldwide Corporation OTIS reported impressive results in third-quarter 2023. Its earnings and net sales surpassed the Zacks Consensus Estimate and rose on a year-over-year basis. Its quarterly results reflected 12 consecutive quarters of organic sales growth and solid operating margin expansion, contributing to high-teens adjusted EPS growth.
OTIS reported quarterly EPS of 95 cents, increasing 18.8% from the year-ago quarter’s figure of 80 cents. Net sales of $3.52 billion rose 5.4% on a year-over-year basis.
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The AZEK Company Inc. (AZEK) : Free Stock Analysis Report
