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Eagle Materials Upped to Strong Buy

Zacks Equity Research

On Jun 29, Zacks Investment Research upgraded Eagle Materials Inc. (EXP) to a Zacks Rank #1 (Strong Buy) as the stock continues to gain momentum from better housing fundamentals.

Why the Upgrade?

The building materials and products supplier, Eagle Materials, is witnessing concomitant rise in its product demand as well as volume with improving new-home demand in the U.S.

Gaining from improving demand for its products, Eagle Materials has beaten the Zacks Consensus Estimate in two of the past four quarters while meeting in one.

Its fiscal fourth-quarter 2013 results (announced on May 14) were fairly strong. Adjusted earnings of 42 cents per share beat the Zacks Consensus Estimate by 5.0%. The results soared 110.0% from the prior-year quarter driven largely by higher pricing and increased demand for its products.

Net sales came in at $159.0 million, up 36.0% from the prior-year quarter, driven largely by wallboard and cement pricing gains and higher volumes in all lines of business considering the strength in new residential construction.

The company has bright prospects ahead, thanks to a positive end-market outlook, cost reduction efforts and an acquisition-based growth strategy. Moreover, its new frac sand business came online in March and started selling its products in April. This is expected to significantly boost both sales and profits.

Estimates are continuously rising, reflecting expectations for significantly higher year-over-year earnings growth rates in fiscal 2013 and 2014.

Other Stocks to Consider

Other stocks in the broader hosing industry, which are currently doing well and are worth considering include Lennar Corporation (LEN), PulteGroup, Inc. (PHM) and D.R. Horton, Inc. (DHI). All the companies carry a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on PHM

Read the Full Research Report on LEN

Read the Full Research Report on DHI

Read the Full Research Report on EXP

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