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Beacon Roofing Shrugs Off Shortfall

"We started to see some gains in residential business later in the year in a few of our regions that did not benefit from storms last year," Buck said. "Our operating expenses were well-controlled and we achieved a substantial build-up of cash in the fourth quarter. We believe the favorable long-term industry growth factors remain in place and we are in a good position to expand our Company in 2011."

Jefferies said it was looking for sales of $500 million in the September quarter, and it left its hold rating in place, citing caution because of "current market headwinds and a lack of catalysts."

The firm expects Beacon could up its acquisition pace in its fiscal 2011 because of its healthy balance sheet and demonstrated fiscal discipline in this area after it made $19 million worth of deals in fiscal 2010 while still reducing debt by $14 million.

In comments released after the conference call, the firm gave a bit of color on what Monday's buyers of the stock may be hanging their hats on.

"Inventories at roofing distributors appear to have normalized -- we note high inventory levels during the summer time resulted in intense pricing competition during the destocking phase," Jefferies said.

So while a material boost to the business will have to wait until the construction market turns a corner along with the broad U.S. economy, some of the market pressures on margins seem to have been alleviated.

The majority of analysts covering Beacon share Jefferies' opinion of the stock with seven of the 12 rating it at hold against three at strong buy and two at buy. The median 12-month price target for the stock sits at $17.50. The bar is a bit lower for the company's performance in the current quarter as Wall Street is looking for earnings of 15 cents a share on revenue of $386.5 million.

-- Written by Michael Baron in New York.

>To contact the writer of this article, click here: Michael Baron.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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