Building Supply and Materials Companies Forecast a Strong Year

codewatcher building materials forecast

Building on the organic growth of the sector; building supply and materials companies forecast a strong year., a leading investor news resource covering  construction, homebuilder and real estate stocks released a snapshot looking at companies in the sector whose financials reflect steady organic growth expectations for 2019.

In recent news, Dodge Data & Analytics released its 2019 Dodge Construction Outlook which predicts that total U.S. construction starts for 2019 will be $808 billion, staying essentially even with the $807 billion estimated for 2018.

The company noted, “There are, of course, mounting headwinds affecting construction, namely rising interest rates and higher material costs, but for now these have been balanced by the stronger growth for the U.S. economy, some easing of bank lending standards, still healthy market fundamentals for commercial real estate, and greater state financing for school construction and enhanced federal funding for public works.”

Another positive sign – Zack’s Research reported last week, “Beacon Roofing Supply came out with quarterly earnings of $0.60 per share, beating the Zacks Consensus Estimate of $0.56 per share. This compares to earnings of $0.68 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 7.14%”

Expectations are high for Builders FirstSource, Inc. (NASDAQ: BLDR) who will hold a conference call and webcast on Friday, March 1, to discuss the company’s fourth quarter 2018 financial results.

Headquartered in Dallas, Texas, Builders FirstSource is the largest US supplier of building products, prefabricated components and value-added services to the professional market segment for new residential construction and repair and remodeling. The company operates in 40 states with approximately 400 locations and has a market presence in 75 of the top 100 Metropolitan Statistical Areas.

Innovest Global Inc. (OTC:IVST), a conglomerate with operations in commercial and industrial products and services, biotechnology, construction and building materials, reported strong growth  in its Construction & Building Materials Division, anchored by ANS, which closed four new members in January and February, adding an expected $5.2 million dollars in revenue for 2019.

These early gains support Innovest’s guidance released last week of 20% organic growth to $50 million in gross company sales for 2019, and strongly reinforces Innovest’s focus on adding value to the company.

Summit Materials, Inc. (NYSE: SUM), a leading vertically integrated construction materials company, recently announced its results for the fourth quarter and full year 2018.

Summit’s net revenue increased 9.0% in the year ended December 29, 2018 as compared to 2017, primarily due to acquisitions, offset by decreases caused by less favorable weather conditions in 2018. Net income and Adjusted EBITDA for the full year 2018 were also lower than in 2017 due to the same factors that impacted the quarterly results.

Tom Hill, CEO of Summit Materials, stated “although we continued to face input cost headwinds in the fourth quarter, we were very pleased to see our organic average sales prices for aggregates increased by 6.5% in the fourth quarter as compared to a year ago. We have also announced our cement price increases for 2019 which will go into effect in the next few months. We continue to believe end market fundamentals remain intact for the construction industry, as well as cement specifically, going into 2019.”

CanWel Building Materials Group Ltd. (TSX:CWX.TOalso released its third quarter 2018 financial results which showed increased revenues of 10.5% to $350.2 million when compared to $316.8 million in the same period in 2017. Sales increased largely due to the inclusion of the results from the Honsador Building Products Group Acquisition and the Company’s continuing focus on its product mix strategies and target customer base.

As more companies like Innovest Global, Builders FirstSource and Beacon Roofing report financials supporting market expectations, investors can expect them to build on this success.

For investors following construction, homebuilder and real estate stocks, Investor Ideas has created a directory of publicly traded companies in the sector.

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