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What's in Store for Quanex (NX) This Earnings Season?

Zacks Equity Research

Quanex Building Products Corporation NX is scheduled to report fourth-quarter fiscal 2019 results on Dec 11, after the closing bell.

In the last reported quarter, earnings of this industry-leading supplier of window and cabinet components to original equipment manufacturers topped the Zacks Consensus Estimate by 13.9% and increased 24.2% year over year. Notably, the company’s earnings surpassed analysts’ expectations in four of the trailing five quarters.

However, revenues fell shy of analysts’ expectations by 3.1% and declined marginally from the year-ago period due to weak demand, primarily in the North American Cabinet Components segment, and inclement weather in the United States.

Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for earnings has been unchanged over the past 30 days at 40 cents per share. This indicates a 81.8% increase from the year-ago reported earnings of 22 cents per share. The consensus mark for revenues is pegged at $241.35 million, suggesting a 1.1% year-over-year decrease.

 

Quanex Building Products Corporation Price and EPS Surprise

 

Quanex Building Products Corporation Price and EPS Surprise

Quanex Building Products Corporation price-eps-surprise | Quanex Building Products Corporation Quote

Factors to Note

Quanex has been performing pretty well of late on the back of strong growth across the markets served. The segments particularly benefited from above-market growth, price increases implemented at 2018-end and improvements in silicone cost for its spacer products. The momentum is expected to have continued in the fiscal fourth quarter as well.

Quanex — which shares space with Aegion Corporation AEGN, Construction Partners, Inc. ROAD and Gibraltar Industries, Inc. ROCK in the Zacks Building Products – Miscellaneous industry — has been recording higher margins in its three reportable segments, namely NA Fenestration, EU Fenestration and NA Cabinet Components, reflecting solid pricing actions and lower SG&A. These positives are expected to reflect on fiscal fourth-quarter results.

However, Quanex is expected to have witnessed soft demand in the to-be-reported quarter despite low interest rates. The company is likely to have registered lower volumes in the NA Cabinet Components segment as comps have been getting more difficult owing to the market shift to stock cabinets from semi-custom.

Nonetheless, its NA Fenestration and EU Fenestration segments are expected to have recorded strong growth. In both the segments, the company projects above-market growth, courtesy of improved sales capabilities and customer outsourcing, along with increased volumes in vinyl extrusion operation.

It is expected to have generated strong cash flow from operations in the fiscal fourth quarter, which will help it to repay debts and buy back shares.

What the Zacks Model Unveils

Quanex does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The company has an Earnings ESP of 0.00%.

Zacks Rank: Quanex currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Quanex Building Products Corporation (NX) : Free Stock Analysis Report
 
Aegion Corporation (AEGN) : Free Stock Analysis Report
 
Gibraltar Industries, Inc. (ROCK) : Free Stock Analysis Report
 
Construction Partners, Inc. (ROAD) : Free Stock Analysis Report
 
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