Beacon (BECN) Acquires Roofers Supply, Boosts Reach in NC
Beacon Roofing Supply, Inc. BECN acquired Greenville, SC-based Roofers Supply of Greenville, with two additional branches located in Charlotte and Raleigh, NC.
The acquisition will help BECN expand its geography and design services in the Carolinas, particularly for commercial roofers. Beacon's shares inched up 1% on Feb 1.
Strategic Efforts to Boost Sales in the Future
Beacon has undertaken several strategic initiatives to drive its long-term ambition of growing and enhancing customer experiences, expanding its top line and margin, as well as boosting value for customers, suppliers, employees and shareholders.
The company has been focusing on its Ambition 2025 targets (announced on Feb 24, 2022), which emphasize operational excellence, an above-market growth trajectory and accelerated stockholder value creation. The financial targets of Ambition 2025 assume that sales will reach $9 billion (8% CAGR) and $1 billion of EBITDA (10% CAGR), which would translate into an 11% EBITDA margin (up 100 basis points from 2021). Impressively, the company exceeded its Ambition 2025 revenue and shareholder return targets for 2023. BECN continues to achieve its further Ambition 2025 growth targets.
As part of this initiative, Beacon has been focusing on business expansion through bolt-on acquisitions and divestitures. In 2023, the company expanded its branch footprint through the completion of nine acquisitions.
In the first nine months of 2023, Beacon opened 19 new branch locations. Also, it added 3 Greenfields during the third quarter of 2023. BECN continues to focus on expansion to drive growth via acquisitions and the addition of greenfield locations. The company plans to open 25 branches in 2023.
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Shares of Beacon — the largest distributor of residential and non-residential roofing materials in the United States and Canada — increased more than 9 times the Building Products - Retail industry in a year. It rose 36% in the said period compared with the industry’s 3.9% growth.
A solid residential backdrop, exceptional operating cost management and cash flow, a focus on the e-commerce platform, a new On-Time and Complete Delivery Network and a newly designed website will help BECN gain further.
Zacks Rank & Key Picks
Beacon currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Retail-Wholesale sector have been discussed below.
GMS Inc. GMS, which distributes wallboards, ceilings, steel framing and complementary construction products in the United States and Canada, currently carries a Zacks Rank #2 (Buy). GMS delivered an average earnings surprise of 3.2% in the trailing four quarters.
The Zacks Consensus Estimate for GMS' current year sales indicates growth of 2.4% from the year-ago period's figure. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fastenal Company FAST has a Zacks Rank #2 at present. It has a trailing four-quarter earnings surprise of 2.6%, on average.
The Zacks Consensus Estimate for FAST’s 2024 sales and EPS indicates growth of 6% and 5.5%, respectively, from the year-ago period’s levels.
Chipotle Mexican Grill, Inc. CMG currently carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 5.8%, on average.
The Zacks Consensus Estimate for CMG’s 2024 sales and EPS implies growth of 13.3% and 19.7%, respectively, from the year-ago period’s levels.
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