The distributor of residential and non-residential roofing materials in the U.S. and Canada faced many difficult factors in 2014, analysts said.
"With approximately $80 oil, we assume single price increases in 2015. We think Beacon's M&A prospects remain numerous, yet we think positive price catalysts amid falling asphalt are few, likely offsetting any near-term benefit from demand outside of a major storm catalyst," analysts said.
"We lower our FY14 EPS to $1.22 from $1.24 (modestly down price) and FY15 EPS to $1.58 from $1.79 on modestly lower residential prices and gross margins not offsetting still favorable commercial trends," analyst added.
Shares of Beacon Roofing Supply closed up 1.03% at $28.51 yesterday.
Separately, TheStreet Ratings team rates BEACON ROOFING SUPPLY INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate BEACON ROOFING SUPPLY INC (BECN) a HOLD. The primary factors that have impacted our rating are mixed --some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.0%. Since the same quarter one year prior, revenues slightly increased by 5.8%. 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.
- The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.87 is somewhat weak and could be cause for future problems.
- Net operating cash flow has significantly decreased to -$82.86 million or 387.66% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, BECN has underperformed the S&P 500 Index, declining 18.70% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full analysis from the report here: BECN Ratings Report