Beacon Roofing Supply, Inc. (BECN): New Analyst Report from Zacks Equity Research – Zacks Equity Research Report

Summary: We are upgrading our recommendation on Beacon Roofing from Underperform to Neutral, with a target price of $42.00. Fourth-quarter 2013 adjusted earnings of Beacon dropped 7% year over year to $0.56 per share, due to lower gross margins. The company will benefit from continued focus on acquisition and its strong balance sheet position. U.S. housing starts also jumped to the highest level in five years, in November. While, pricing pressure, general market softness and competitive market remain headwinds for top-line growth. Further, the Architecture Billings Index fell to 49.8 in November, from 51.6 a month earlier due to uncertainty in demand. Moreover, higher mix of non-residential roofing products and sales mix will negatively impact gross margins in the near term.

Overview:

Founded in 1928, Beacon Roofing Supply, Inc. (BECN) is one of the three largest roofing material distributors in the United States and Canada, with more than 90% of its sales coming from the U.S. Besides selling roofing materials asphalt shingles and single-ply roofing to both residential and non-residential markets, Beacon also deals in complementary building materials such as vinyl siding, doors, windows, insulation, and waterproofing systems. The company operates 236 branches across 39 states in the U.S. and 6 provinces in Canada. Its competition is primarily from local and regional roofing supply distributors. Local contractors dealing with roof replacement make up the bulk of its sales.

BEACON ROOFING (BECN): Free Stock Analysis Report

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Beacon Roofing Supply, Inc. (BECN): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report