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Gibraltar (ROCK) to Report Q4 Earnings: What's in the Cards?

Zacks Equity Research

Gibraltar Industries Inc. ROCK is scheduled to report fourth-quarter 2018 results on Feb 21, before the opening bell. In the last reported quarter, the company’s earnings came in at 71 cents per share, beating the Zacks Consensus Estimate by 1.4%. However, revenues of $280 million lagged the consensus mark by 2.4%.

Meanwhile, third-quarter earnings grew 6% on 2% revenue growth, supported by remarkable improvement of its Renewable Energy & Conservation segment, improved mix of higher-margin innovative products, along with effective price-material cost management.

How are Estimates Faring?

Let’s take a look at the estimate revision trend in order to get a clear picture of what analysts are thinking about the company prior to the earnings release.

The Zacks Consensus Estimate for the quarter to be reported is currently pegged at 40 cents per share, remaining unchanged over the past 60 days. The estimate reflects 2.4% year-over-year decline. Total revenues are expected to be $245.6 million, down 4.9% year over year.

Gibraltar Industries, Inc. Price and EPS Surprise


Gibraltar Industries, Inc. Price and EPS Surprise | Gibraltar Industries, Inc. Quote

Factors at Play

The fourth quarter is likely to be impacted by higher input cost inflation that has been hurting the company’s performance to some extent over the past few quarters. The steel and aluminum tariffs announced earlier in 2018 continued to impact its material costs. Although the company has been working to recover higher commodity costs through price increases, it expects continued volatility in material costs owing to tariff-related issues. The company expects fourth-quarter revenues between $239 million and $249 million, down from $257 million a year ago, considering current activity levels across its end markets. This depicts a tough comparison from the year-ago level, wherein both residential and renewals conservation end markets sustained higher activity levels despite unfavorable weather conditions.

That said, the company is poised to benefit from the four-pillar value creation strategy, well-planned acquisitions and improving operational excellence. Particularly, it expects 80/20 simplification and innovation efforts to mitigate market headwinds, as well as continue driving momentum in growth and profitability. Meanwhile, stronger demand for innovative products, coupled with growth in Renewable Energy & Conservation business are likely to strongly contribute to revenue growth.

The company expects fourth-quarter adjusted earnings within 35-40 cents per share.

Quantitative Model Prediction

Our proven model does not show that Gibraltar is likely to beat earnings estimates in the to-be-reported quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The company has an Earnings ESP of 0.00% and a Zacks Rank #3, which does not make us confident of an earnings beat in the to-be-reported quarter. It is to be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks With Favorable Combination

Here are a few construction stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming release:

Forterra, Inc. FRTA has an Earnings ESP of +8.99% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Toll Brothers Inc. TOL has an Earnings ESP of +1.91% and holds a Zacks Rank #3.

Winnebago Industries, Inc. WGO has an Earnings ESP of +10.80% and holds a Zacks Rank #3.

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