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Don't Get Too Worked Up Over Beacon Roofing Supply's Earnings

- June 4, 2013 by Mr HomeBuilder

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Beacon Roofing Supply (Nasdaq: BECN) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Beacon Roofing Supply generated $6.1 million cash while it booked net income of $71.4 million. That means it turned 0.3% of its revenue into FCF. That doesn't sound so great. FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Beacon Roofing Supply look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

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Don't Get Too Worked Up Over Beacon Roofing Supply's Earnings

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Moore & Sons Roofing Named an Owens Corning Platinum Preferred Contractor

- June 4, 2013 by Mr HomeBuilder

Grand Rapids, MI (PRWEB) June 03, 2013

Grand Rapids-based company Moore & Sons Roofing has been named an Owens Corning Platinum Preferred Contractor. This distinction reinforces the Michigan roofers dedication to high-quality services and customer satisfaction.

The Owens Corning Platinum Preferred Contractor award recognizes select contractors who are listed in the prominent Owens Corning Network. Contractors that are given this distinction are individually selected based on factors including superior customer service, high-quality work and licensing status.

Positive standing with the Better Business Bureau is also required for a contractor to be selected for this recognition. Owens Corning Platinum Preferred Contractors must be properly licensed and insured, have a positive credit rating as determined by Dun & Bradstreet, have no bankruptcies on record for the past seven years and operate under their current business name for a minimum of three years prior to receiving the distinction.

Owens Corning Platinum Preferred Contractors represent less than 1% of contractors operating in the United States. This unique opportunity sets Moore & Sons Roofing apart from the competition and provides potential clients with an assurance that any services received from the roofer will be exceptional.

About Moore & Sons Roofing:

Moore & Sons Roofing is a family-owned company with over three decades of experience. The roofer now operates offices in both Kalamazoo and Grand Rapids, MI to better serve home and business owners in all of Western Michigan. Roofing installations, repairs and restorations are all available from the established company, so clients do not have to search for more than one company to meet their multiple roofing needs. Other services available through Moore & Sons Roofing include gutters and siding.

For more information, visit http://www.mooreandsonsroofing.com/.

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Moore & Sons Roofing Named an Owens Corning Platinum Preferred Contractor

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Replacement Windows Atlanta Ga | (770) 400-9066 | Window Replacement – Video

- June 4, 2013 by Mr HomeBuilder

Replacement Windows Atlanta Ga | (770) 400-9066 | Window Replacement
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Replacement Windows Atlanta Ga | (770) 400-9066 | Window Replacement - Video

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Replacement Windows Alpharetta Ga | (770) 400-9066 | Window Replacement – Video

- June 4, 2013 by Mr HomeBuilder

Replacement Windows Alpharetta Ga | (770) 400-9066 | Window Replacement
http://zenwindows.com Replacement Windows Alpharetta Ga http://zenwindowsatlanta.com Replacement Windows in Atlanta Ga. Zen Windows is a Replacement Window C...

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Replacement Windows Alpharetta Ga | (770) 400-9066 | Window Replacement - Video

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