Home Construction Materials Stocks Q2 Teardown: Fortune Brands (NYSE:FBIN) Vs The Rest
Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Fortune Brands (NYSE:FBIN) and the best and worst performers in the home construction materials industry.
Traditionally, home construction materials companies have built economic moats with expertise in specialized areas, brand recognition, and strong relationships with contractors. More recently, advances to address labor availability and job site productivity have spurred innovation that is driving incremental demand. However, these companies are at the whim of residential construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates. Additionally, the costs of raw materials can be driven by a myriad of worldwide factors and greatly influence the profitability of home construction materials companies.
The 12 home construction materials stocks we track reported a mixed Q2. As a group, revenues missed analysts’ consensus estimates by 2.4% while next quarter’s revenue guidance was 22.9% below.
Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Thankfully, home construction materials stocks have been resilient with share prices up 7.6% on average since the latest earnings results.
Fortune Brands (NYSE:FBIN)
Targeting a wide customer base of residential and commercial customers, Fortune Brands (NYSE:FBIN) makes plumbing, security, and outdoor living products.
Fortune Brands reported revenues of $1.24 billion, up 6.6% year on year. This print fell short of analysts’ expectations by 3.1%. Overall, it was a softer quarter for the company with a miss of analysts’ earnings and organic revenue estimates.
“Our teams continued to execute at a high level in a dynamic market. We delivered solid second quarter sales as our core U.S. products outperformed the market and we saw acceleration in our digital products,” said Fortune Brands Chief Executive Officer Nicholas Fink.
Interestingly, the stock is up 23.2% since reporting and currently trades at $88.96.
Read our full report on Fortune Brands here, it’s free.
Best Q2: JELD-WEN (NYSE:JELD)
Founded in the 1960s as a general wood-making company, JELD-WEN (NYSE:JELD) manufactures doors, windows, and other related building products.
JELD-WEN reported revenues of $986 million, down 12.4% year on year, falling short of analysts’ expectations by 1.4%. However, the business still had an exceptional quarter with an impressive beat of analysts’ organic revenue and earnings estimates.
JELD-WEN scored the highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 5.2% since reporting. It currently trades at $15.45.
Is now the time to buy JELD-WEN? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Simpson (NYSE:SSD)
Aiming to build safer and stronger buildings, Simpson (NYSE:SSD) designs and manufactures structural connectors, anchors, and other construction products.
Simpson reported revenues of $597 million, flat year on year, falling short of analysts’ expectations by 1.3%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
Interestingly, the stock is up 6.1% since the results and currently trades at $191.81.
Read our full analysis of Simpson’s results here.
Gibraltar (NASDAQ:ROCK)
Gibraltar (NASDAQ:ROCK) makes renewable energy, agriculture technology and infrastructure products. Its mission statement is to make everyday living more sustainable.
Gibraltar reported revenues of $353 million, down 3.3% year on year. This number came in 5.5% below analysts' expectations. Overall, it was a slower quarter as it also logged a miss of analysts’ earnings estimates.
Gibraltar had the weakest full-year guidance update among its peers. The stock is down 16.8% since reporting and currently trades at $66.73.
Read our full, actionable report on Gibraltar here, it’s free.
Builders FirstSource (NYSE:BLDR)
Headquartered in Irving, TX, Builders FirstSource (NYSE:BLDR) is a construction materials manufacturer that offers a variety of lumber and lumber-related building products.
Builders FirstSource reported revenues of $4.46 billion, down 1.6% year on year. This print was in line with analysts’ expectations. Overall, it was a strong quarter as it also put up an impressive beat of analysts’ operating margin estimates.
The stock is up 31.6% since reporting and currently trades at $197.
Read our full, actionable report on Builders FirstSource here, it’s free.
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