Bear of the Day: Beacon Roofing (BECN)

Beacon Roofing (BECN) has seen estimates for 2013 and 2014 fall recently. A recent downgrade has pushed the Zacks Rank to the lowest level. BECN is a Zacks Rank #5 (Strong Sell). It is the Bear of the Day.

Recent Downgrade

The stock fell a significant amount the other day due to a downgrade from Robert W. Baird. The investment firm lowered their rating on the stock to Neutral from Outperform and took their target down to $39 from $42 based on lower estimates. Lowered estimates are a key reason stocks become Zacks Rank #5 (Strong Sell).

Company Description

Beacon Roofing Supply, Inc. distributes residential and non-residential roofing materials to contractors, home builders, building owners, and other resellers. As of August 9, 2013, it operated through a network of 231 branches in 38 states of the United States, and Canada. Beacon Roofing Supply, Inc. was founded in 1928 and is based in Peabody, Massachusetts.

Earnings History

BECN has hit a rough patch in what is a spotty-to-good earnings history. The last three reports have all come in under the Zacks Consensus Estimate, with the most recent miss being the biggest in quite a while. The company reported earnings of $0.55 vs. the $0.71 estimate, for a miss of $0.16 or 22% below expectations. On that earnings release the company also lowered guidance, further reducing expectations for the future.

Over the last 5 quarters, the topline has been challenged as well. While still posting year over year growth in the last two quarters, the company has not been able to beat the Zacks Consensus revenue estimate since the March 2012 quarter.

Earnings Estimates Slip

Estimates for BECN have been sliding of late. Starting in April, the 2013 Zacks Consensus Estimate was $1.87, but that soon fell to $1.80 the following month. Estimates dropped to $1.79 in July and are now at $1.55.

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Bear of the Day: Beacon Roofing (BECN)