NEW YORK (TheStreet) -- Beacon Roofing Supply (BECN) shares closed the day up 2.9% to $35.30 in trading on Friday despite posting second quarter earnings and revenue numbers below analysts estimates.
The residential and non-residential roofing materials distributor reported revenue of $384.9 million, well below analysts $422.79 million mark, with a net loss of -25 cents per share, 19 cents worse than analysts were expecting.
However, the companysaid that it expects to see pricing improvement and demand pick up in the second half of the fiscal year as the first two quarters are often the toughest of the roofing industry due to inclement weather.
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TheStreet Ratings team rates BEACON ROOFING SUPPLY INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate BEACON ROOFING SUPPLY INC (BECN) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BECN's revenue growth has slightly outpaced the industry average of 2.0%. Since the same quarter one year prior, revenues slightly increased by 7.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $54.15 million or 14.51% when compared to the same quarter last year. In addition, BEACON ROOFING SUPPLY INC has also modestly surpassed the industry average cash flow growth rate of 6.90%.
- BECN's debt-to-equity ratio is very low at 0.30 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.99 is somewhat weak and could be cause for future problems.
- BEACON ROOFING SUPPLY INC's earnings per share declined by 18.9% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, BEACON ROOFING SUPPLY INC reported lower earnings of $1.47 versus $1.59 in the prior year. This year, the market expects an improvement in earnings ($1.69 versus $1.47).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Trading Companies & Distributors industry. The net income has decreased by 17.8% when compared to the same quarter one year ago, dropping from $18.21 million to $14.96 million.
- You can view the full analysis from the report here: BECN Ratings Report