Factors Setting the Tone for Beacon Roofing’s (BECN) Q4 Earnings

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Beacon Roofing Supply, Inc. BECN is slated to report fourth-quarter 2023 results on Feb 27, after the closing bell.

In the last reported quarter, the company’s adjusted earnings topped the Zacks Consensus Estimate by 12.2% but net sales missed the mark by 0.2%. Both earnings and net sales grew 26.7% and 7%, respectively, from the year-ago quarter’s level.

The company’s earnings have topped the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 11.1%.

Beacon Roofing Supply, Inc. Price and EPS Surprise

Beacon Roofing Supply, Inc. Price and EPS Surprise

Beacon Roofing Supply, Inc. price-eps-surprise | Beacon Roofing Supply, Inc. Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for fourth-quarter earnings per share (EPS) has increased to $1.69 from $1.66 over the past 60 days. The said figure indicates 38.5% growth from the year-ago EPS of $1.22.
 
The consensus estimate for net sales is pinned at $2.28 billion, suggesting 15.6% growth from the year-ago quarter’s reported figure of $1.97 billion.

Factors to Note

The company’s fourth-quarter 2023 revenues are likely to have benefited from robust demand in the non-discretionary repair and re-roofing market. Taking advantage of this demand, the company has prioritized disciplined pricing, enhanced labor productivity, and effective management of working capital. Furthermore, growth initiatives outlined in Ambition 2025, along with strategic investments in greenfields and acquisitions, are expected to have been the key drivers of growth in the quarter.

The company expects net sales to increase in the range of 11-13% on a year-over-year basis for the quarter.

Segment-wise, for the Residential Roofing Product segment (comprising 53.1% of net sales), our model predicts segment revenues to grow 17.9% year over year to $1.14 billion from a year ago.

For the Non-Residential Roofing Product segment (comprising 26.1% of the net sales), our model predicts revenues to grow 2.5% year over year to $576.8 million from a year ago.

For the Complementary Building Products segment (comprising 20.8% of net sales), our model predicts revenues to grow 15.7% year over year to $508.6 million from a year ago.

Meanwhile, the company expects gross margin to be 25.5% in the quarter, down from 26.2% a year ago. Higher product costs are expected to impact the company’s quarterly margin. Also, higher expenses related to newly acquired branches and greenfields are headwinds.

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What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Beacon Roofing this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here, as elaborated below.

Currently, the company has an Earnings ESP of -7.67% and carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks Poised to Beat Estimates

Here are some stocks worth considering from the Zacks Retail-Wholesale space, as our model shows that they have the right combination of elements to beat on earnings this season.

Costco COST currently has an Earnings ESP of +1.58% and carries a Zacks Rank #2. The Zacks Consensus Estimate for second-quarter fiscal 2024 EPS is pegged at $3.60, up 9.1% year over year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco’s top line is expected to ascend year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $59.2 billion, which indicates an increase of 7.1% from the figure reported in the prior-year quarter. COST has a trailing four-quarter earnings surprise of 2.6%, on average.

Dave & Buster’s Entertainment, Inc. PLAY has an Earnings ESP of +3.51% and a Zacks Rank of 2.

PLAY’s earnings for the quarter under review are expected to increase 42.5%. It reported better-than-expected earnings in three of the trailing four quarters and matched on the remaining one occasion, the average surprise being 34.5%.

Sweetgreen, Inc. SG has an Earnings ESP of +26.62% and a Zacks Rank of 3.

SG is expected to register 47.7% growth in earnings for the quarter to be reported. It reported better-than-expected earnings once and missed on three occasions, the average surprise being negative 2.9%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Costco Wholesale Corporation (COST) : Free Stock Analysis Report

Beacon Roofing Supply, Inc. (BECN) : Free Stock Analysis Report

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Sweetgreen, Inc. (SG) : Free Stock Analysis Report

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