Wrapping up Q1 earnings, we look at the numbers and key takeaways for the home construction materials stocks, including Trex (NYSE:TREX) and its peers.
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 satisfactory Q1. As a group, revenues were in line with analysts’ consensus estimates.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Trex (NYSE:TREX)
Addressing the demand for aesthetically-pleasing and unique outdoor living spaces, Trex Company (NYSE:TREX) makes wood-alternative decking, railing, and patio furniture.
Trex reported revenues of $340 million, down 9% year on year. This print exceeded analysts’ expectations by 3.5%. It was a decent quarter for the company with a narrow beat of analysts’ adjusted operating income estimates.
“First quarter sales exceeded our expectations driven by the continued strength of our premium products and our prominent position in both retail and the pro-channel,” said Bryan Fairbanks, President and CEO.
The stock is down 2.7% since reporting and currently trades at $56.73.
Is now the time to buy Trex? Access our full analysis of the earnings results here, it’s free.
Best Q1: 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 $538.9 million, up 1.6% year on year, outperforming analysts’ expectations by 2%. The business had an exceptional quarter with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ EPS estimates.
The market seems content with the results as the stock is up 2.2% since reporting. It currently trades at $156.87.
Is now the time to buy Simpson? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Masco (NYSE:MAS)
Headquartered just outside of Detroit, MI, Masco (NYSE:MAS) designs and manufactures home-building products such as glass shower doors, decorative lighting, bathtubs, and faucets.
Masco reported revenues of $1.80 billion, down 6.5% year on year, falling short of analysts’ expectations by 2%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
Interestingly, the stock is up 4.1% since the results and currently trades at $63.86.
Read our full analysis of Masco’s results here.
American Woodmark (NASDAQ:AMWD)
Starting as a small millwork shop, American Woodmark (NASDAQ:AMWD) is a cabinet manufacturing company that helps customers from inspiration to installation.
American Woodmark reported revenues of $400.4 million, down 11.7% year on year. This print came in 6.6% below analysts' expectations. It was a softer quarter as it also recorded full-year EBITDA guidance missing analysts’ expectations.
American Woodmark had the weakest performance against analyst estimates among its peers. The stock is down 2.4% since reporting and currently trades at $55.20.
Read our full, actionable report on American Woodmark here, it’s free.
Quanex (NYSE:NX)
Starting in the seamless tube industry, Quanex (NYSE:NX) manufactures building products like window, door, kitchen, and bath cabinet components.
Quanex reported revenues of $452.5 million, up 70% year on year. This number beat analysts’ expectations by 3.2%. Overall, it was an exceptional quarter as it also produced a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ adjusted operating income estimates.
Quanex delivered the fastest revenue growth and highest full-year guidance raise among its peers. The stock is up 16.5% since reporting and currently trades at $19.93.
Read our full, actionable report on Quanex here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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