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NCI Building Down to Strong Sell

Zacks Equity Research

On Mar 26, Zacks Investment Research downgraded NCI Building Systems Inc. (NCS), a metal building components maker, to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

NCI Building has witnessed sharp downward estimate revisions after reporting a loss per share of 5 cents in the first quarter of fiscal 2014. However, the loss was narrower than the prior-year quarter loss of 19 cents but compared unfavorably with the Zacks Consensus Estimate of gain per share of one cent.  

Sales climbed 4.4% year over year to $311 million but lagged the Zacks Consensus Estimate.

Management did not provide any specific guidance for fiscal 2014. Given the recent steady improvement in business conditions at architectural firms, non-residential new construction is expected to witness single-digit year-over-year growth.

Additionally, an important raw material for NCI Buildings is steel. The steel industry is cyclical in nature and the metal’s price has been highly volatile in the past few years. If the price fluctuation persists in the future, it could compress NCI Buildings’ margins.  

Following the first-quarter earnings announcement, the Zacks Consensus Estimate for NCI Building declined 11% to 24 cents per share for 2014 and 6% to 61 cents per share for 2015.

Other Stocks to Consider
Some other stocks in the sector that warrant a look include Gibraltar Industries, Inc. (ROCK), USG Corporation (USG) and United Rentals, Inc. (URI). While Gibraltar sports a Zacks Rank #1 (Strong Buy), USG Corporation and United Rentals have a Zacks Rank #2 (Buy).

Read the Full Research Report on NCS
Read the Full Research Report on ROCK
Read the Full Research Report on URI
Read the Full Research Report on USG

Zacks Investment Research