Beacon Roofing Gets Blown Away by Earnings and Analysts

Beacon Roofing Supply Inc. (NASDAQ: BECN) is considered to be one of the losers of earnings season now that its shares were last seen down in the double-digit percentage losers after its earnings report failed to meet expectations. Perhaps the only good news here is that not every analyst following the stock has thrown in the towel and that its drop was initially even worse in the after-hours trading than it has been in the open market.

Beacon Roofing’s less than favorable third-quarter financial results were $1.18 in earnings per share and $1.93 billion in revenue. This didn’t live up to the consensus estimates of $1.32 in EPS and $2.07 billion in revenue.

24/7 Wall St. has tracked multiple analyst calls on the stock after the disappointing earnings report. While all have some negative observations, not every analyst is abandoning the roofing materials supplier.

Beacon Roofing was downgraded to Neutral from Buy and the target price was cut to $44 from $51 at Citigroup.

SunTrust Robinson Humphrey lowered its price target to $52 from $58.

Wells Fargo downgraded Beacon Roofing to Underperform from Market Perform while slashing its target to $33 from $53.

Wedbush maintained its Outperform rating, but the firm’s Jay McCanless lowered his price target to $50 from $65. The rating pointed to a lack of adverse weather events so far this year, as well as difficult comparisons versus last year’s storms pushing adjusted earnings per share below consensus for the second straight quarter. McCanless said of the report:

The trend continued into July with existing sales down by a mid-single-digit percentage year-over-year. However, the prior year weather comparisons should ease post-July, and Beacon Roofing sees the price/cost momentum from the second quarter and third quarter continuing… Sales in Beacon’s residential and complementary segments have been growing steadily for several years, and we expect that to continue into Fiscal Year 2018. The acquisition of Allied Building Production January 2, 2018, adds to Beacon’s core roofing business and expands the company into interior product (drywall and ceilings) sales. We view the shares as undervalued at current levels.

Beacon Roofing shares were last seen trading down 14.4% at $36.36 after a little more than an hour of trading on Wednesday morning. The stock has a 52-week trading range of $35.41 to $66.47 and a consensus analyst price target of $56.60. Its average daily trading volume of 1.28 million shares was already doubled after about an hour of trading.

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