Beacon Roofing Supply (BECN) Showing Signs Of Being Strong And Under The Radar

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Beacon Roofing Supply ( BECN) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Beacon Roofing Supply as such a stock due to the following factors:

  • BECN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $10.3 million.
  • BECN is making at least a new 3-day high.
  • BECN has a PE ratio of 31.
  • BECN is mentioned 0.61 times per day on StockTwits.
  • BECN has not yet been mentioned on StockTwits today.
  • BECN is currently in the upper 20% of its 1-year range.
  • BECN is in the upper 35% of its 20-day range.
  • BECN is in the upper 45% of its 5-day range.
  • BECN is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on BECN:

Beacon Roofing Supply, Inc. distributes residential and non-residential roofing materials to contractors, home builders, building owners, and other resellers. BECN has a PE ratio of 31. Currently there is 1 analyst that rates Beacon Roofing Supply a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Beacon Roofing Supply has been 384,100 shares per day over the past 30 days. Beacon Roofing Supply has a market cap of $1.6 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.91 and a short float of 7.5% with 11.38 days to cover. Shares are up 18.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Beacon Roofing Supply as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • BECN's revenue growth has slightly outpaced the industry average of 5.2%. Since the same quarter one year prior, revenues slightly increased by 7.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Trading Companies & Distributors industry average. The net income increased by 19.2% when compared to the same quarter one year prior, going from -$12.12 million to -$9.79 million.
  • BECN's debt-to-equity ratio is very low at 0.28 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 0.89 is somewhat weak and could be cause for future problems.
  • BECN has underperformed the S&P 500 Index, declining 8.67% 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.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Trading Companies & Distributors industry and the overall market, BEACON ROOFING SUPPLY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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