As the Q1 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the building materials industry, including AZEK (NYSE: AZEK) and its peers.
Traditionally, building materials companies have built competitive advantages with economies of scale, brand recognition, and strong relationships with builders and contractors. More recently, advances to address labor availability and job site productivity have spurred innovation. Additionally, companies in the space that can produce more energy-efficient materials have opportunities to take share. However, these companies are at the whim of construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates. Additionally, the costs of raw materials can be driven by a myriad of worldwide factors and greatly influence the profitability of building materials companies.
The 9 building materials stocks we track reported a mixed Q1. As a group, revenues beat analysts’ consensus estimates by 1.1% while next quarter’s revenue guidance was in line.
Thankfully, share prices of the companies have been resilient as they are up 9.2% on average since the latest earnings results.
AZEK (NYSE: AZEK)
With a significant portion of its products made from recycled materials, AZEK (NYSE: AZEK) designs and manufactures goods for outdoor living spaces.
AZEK reported revenues of $452.2 million, up 8.1% year on year. This print exceeded analysts’ expectations by 1.7%. Despite the top-line beat, it was still a mixed quarter for the company with a decent beat of analysts’ EBITDA estimates but full-year EBITDA guidance slightly missing analysts’ expectations.
AZEK delivered the weakest full-year guidance update of the whole group. Interestingly, the stock is up 9.5% since reporting and currently trades at $54.35.
Is now the time to buy AZEK? Access our full analysis of the earnings results here, it’s free.
Best Q1: Armstrong World (NYSE: AWI)
Started as a two-man shop dating back to the 1860s, Armstrong (NYSE: AWI) provides ceiling and wall products to commercial and residential spaces.
Armstrong World reported revenues of $424.6 million, up 16.3% year on year, outperforming analysts’ expectations by 5.2%. The business had a stunning quarter with an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ EBITDA estimates.
The market seems happy with the results as the stock is up 17.5% since reporting. It currently trades at $198.43.
Is now the time to buy Armstrong World? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Carlisle (NYSE: CSL)
Originally founded as Carlisle Tire and Rubber Company, Carlisle Companies (NYSE: CSL) is a multi-industry product manufacturer focusing on construction materials and weatherproofing technologies.
Carlisle reported revenues of $1.45 billion, flat year on year, falling short of analysts’ expectations by 3.2%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates and a significant miss of analysts’ EBITDA estimates.
As expected, the stock is down 3.1% since the results and currently trades at $396.20.
Read our full analysis of Carlisle’s results here.
Valmont (NYSE: VMI)
Credited with an invention in the 1950s that improved crop yields, Valmont (NYSE: VMI) provides engineered products and infrastructure services for the agricultural industry.
Valmont reported revenues of $1.05 billion, up 1% year on year. This number topped analysts’ expectations by 1.7%. Aside from that, it was a satisfactory quarter as it also recorded an impressive beat of analysts’ adjusted operating income estimates but full-year EPS guidance slightly missing analysts’ expectations.
The stock is up 13.8% since reporting and currently trades at $377.91.
Read our full, actionable report on Valmont here, it’s free.
Tecnoglass (NYSE: TGLS)
The first-ever Colombian company to trade on the NASDAQ, Tecnoglass (NYSE: TGLS) is a manufacturer of architectural glass, windows, and aluminum products.
Tecnoglass reported revenues of $255.5 million, up 16.3% year on year. This result beat analysts’ expectations by 4.3%. Overall, it was a very strong quarter as it also logged a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ adjusted operating income estimates.
The stock is down 7.1% since reporting and currently trades at $72.74.
Read our full, actionable report on Tecnoglass here, it’s free.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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