Earnings results often indicate what direction a company will take in the months ahead. With Q4 behind us, let’s have a look at 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 Q4. As a group, revenues beat analysts’ consensus estimates by 1.5%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 18.2% 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 $167.6 million, down 14.4% year on year. This print exceeded analysts’ expectations by 4.4%. Overall, it was a stunning quarter for the company with a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EPS estimates.
“The continued strong performance of our premium product lines and stable sequential demand trends for our value-priced products led to fourth quarter sales above our expectations, enabling us to exceed our full year revenue guidance. The significant EBITDA outperformance in the fourth quarter demonstrated the positive leverage of our business model on higher utilization, driven, in part, by our year-end inventory build, as well as the benefits of our continuous cost-out programs,” said Bryan Fairbanks, President and CEO.
Trex delivered the slowest revenue growth of the whole group. The stock is down 9.9% since reporting and currently trades at $55.61.
Is now the time to buy Trex? Access our full analysis of the earnings results here, it’s free.
Best Q4: Owens Corning (NYSE:OC)
Credited with the discovery of fiberglass, Owens Corning (NYSE:OC) supplies building and construction materials to the United States and international markets.
Owens Corning reported revenues of $2.84 billion, up 23.3% year on year, outperforming analysts’ expectations by 2.7%. The business had a stunning quarter with an impressive beat of analysts’ organic revenue and EBITDA estimates.
The stock is down 16.8% since reporting. It currently trades at $137.82.
Is now the time to buy Owens Corning? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: 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 $397.6 million, down 5.8% year on year, falling short of analysts’ expectations by 3.3%. It was a disappointing quarter as it posted full-year EBITDA guidance missing analysts’ expectations.
As expected, the stock is down 20.9% since the results and currently trades at $56.31.
Read our full analysis of American Woodmark’s results here.
JELD-WEN (NYSE:JELD)
Founded in the 1960s as a general wood-making company, JELD-WEN (NYSE:JELD) manufactures doors, windows, and other related building products.
JELD-WEN reported revenues of $895.7 million, down 12.3% year on year. This print surpassed analysts’ expectations by 5.8%. Zooming out, it was a mixed quarter as it also logged a solid beat of analysts’ organic revenue estimates but full-year revenue guidance missing analysts’ expectations.
JELD-WEN had the weakest full-year guidance update among its peers. The stock is down 41.3% since reporting and currently trades at $5.16.
Read our full, actionable report on JELD-WEN here, it’s free.
Fortune Brands (NYSE:FBIN)
Targeting a wide customer base of residential and commercial customers, Fortune Brands (NYSE:FBIN) makes plumbing, security, and outdoor living products.
Fortune Brands reported revenues of $1.10 billion, down 4.9% year on year. This result lagged analysts' expectations by 3.5%. It was a disappointing quarter as it also recorded full-year EPS guidance missing analysts’ expectations.
Fortune Brands had the weakest performance against analyst estimates among its peers. The stock is down 25.5% since reporting and currently trades at $51.47.
Read our full, actionable report on Fortune Brands here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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