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Beacon Roofing (BECN) Acquires WRS for Branch Expansion

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Shares of Beacon Roofing Supply, Inc. (BECN) gained as much as 4.8% and closed at $25.67 on Oct 17, after the company acquired Wholesale Roofing Supply (:WRS) on Oct 15. The acquisition is a strategic fit for both the companies.

Based in Dallas, TX, WRS is a distributor of residential roofing materials and is expected to report sales of around $34 million in 2014. The acquisition will help in the expansion of Beacon Roofing’s branches in the Dallas/Ft. Worth area, enabling the company to serve its customers in the area better and faster. Beacon Roofing hopes to retain the current WRS team after the purchase.

Recently Beacon Roofing acquired Applicators Sales & Service (Applicators), a distributor of primarily residential roofing, siding, windows and related accessories, to strengthen its presence in northern New England.

Further on Aug 29, Beacon Roofing acquired All Weather Products Ltd. (AWP) along with its three branches, with an aim to expand in Vancouver and to facilitate growth through geographical expansion.

Beacon Roofing will benefit from its consistent focus on cost control. Its investments in equipment and inventory, along with employee training and greenfield expansion will drive growth. However, a difficult pricing environment will continue to weigh on gross margins.

Peabody, MA-based Beacon Roofing is one of the major distributors of residential and non-residential roofing materials as well as complementary building products in the U.S. and Canada, with more than 90% of sales coming from the U.S.

Beacon Roofing currently has a Zacks Rank #4 (Sell). However, some better-ranked stocks in the same industry include The Home Depot, Inc. (HD), Lowe's Companies Inc. (LOW) and Advance Auto Parts Inc. (AAP). All these stocks carry a Zacks Rank #2 (Buy).

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