Dissecting the Investment Cases for Beacon Roofing Supply, Inc. (BECN) and US Concrete, Inc. (USCR) – Economic News

Beacon Roofing Supply, Inc. (NASDAQ:BECN) and U.S. Concrete, Inc. (NASDAQ:USCR) are both Industrial Goods companies that recently hit new low. Naturally, this has created a bit of a stir amongst investors. We will compare the two companies across various metrics including growth, profitability, risk, return, dividends, and valuation to determine if one is a better choice than the other.

Beacon Roofing Supply, Inc. (NASDAQ:BECN) operates in the General Building Materials segment of the Industrial Goods sector. The company has grown sales at a 17.80% annual rate over the past five years, putting it in the high growth category. BECN has a net profit margin of 2.40% and is less profitable than the average company in the General Building Materials industry. In terms of efficiency, BECN has an asset turnover ratio of 1.33. This figure represents the amount of revenue a company generates per dollar of assets. BECNs financial leverage ratio is 1.44, which indicates that the companys asset base is primarily funded by equity capital. Companys return on equity, which is really just the product of the companys profit margin, asset turnover, and financial leverage ratios, is 7.60%, which is worse than the General Building Materials industry average ROE.

Stocks free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is -2.94. All else equal, companies with higher FCF yields are viewed as cheaper. Company trades at a P/E ratio of 27.67, and is more expensive than the average stock in the General Building Materials industry. The average investment recommendation for BECN, taken from a group of Wall Street Analysts, is 1.80, or a buy.

Over the past three months, Beacon Roofing Supply, Inc. insiders have been net buyers, dumping a net of 0 shares. This implies that insiders have been feeling relatively bearish about the outlook for BECN. Insider activity and sentiment signals are important to monitor because they can shed light on how risky a stock is perceived to be at its current valuation. Knowing this, it makes sense to look at beta, a measure of market risk. BECN has a beta of 1.30 and therefore an above average level of market volatility.

U.S. Concrete, Inc. (NASDAQ:USCR) operates in the General Building Materials segment of the Industrial Goods sector. USCR has increased sales at a 21.20% CAGR over the past five years, and is considered a high growth stock. The company has a net profit margin of 2.10% and is less profitable than the average General Building Materials player. USCRs asset turnover ratio is 1.21 and the company has financial leverage of 4.92. Company is therefore mostly financed by debt. USCRs return on equity of 13.40% is worse than the General Building Materials industry average.

The company trades at a free cash flow yield of 1.2 and has a P/E of 50.82. Compared to the average company in the 12.96 space, USCR is relatively expensive. The average analyst recommendation for USCR is 1.30 , or a strong buy.

U.S. Concrete, Inc. insiders have sold a net of -32,025 shares during the past three months, which implies that the companys top executives have been feeling bearish about the stocks outlook. Finally, USCRs beta of 1.21 indicates that the stock has an above average level of market risk.

USCR has the better fundamentals, scoring higher on growth and return metrics.

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Dissecting the Investment Cases for Beacon Roofing Supply, Inc. (BECN) and US Concrete, Inc. (USCR) - Economic News