The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Tecnoglass (NYSE: TGLS) and the rest of the building materials stocks fared in Q3.
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 slower Q3. As a group, revenues missed analysts’ consensus estimates by 1% while next quarter’s revenue guidance was 2.8% above.
While some building materials stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.3% since the latest earnings results.
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 $238.3 million, up 13.1% year on year. This print fell short of analysts’ expectations by 0.8%, but it was still a strong quarter for the company with a solid beat of analysts’ EBITDA estimates and full-year EBITDA guidance beating analysts’ expectations.
Interestingly, the stock is up 6% since reporting and currently trades at $74.45.
Best Q3: 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 $348.2 million, down 10.4% year on year, outperforming analysts’ expectations by 2.4%. The business had a strong quarter with a solid beat of analysts’ adjusted operating income estimates and an impressive beat of analysts’ organic revenue estimates.
AZEK delivered the biggest analyst estimates beat among its peers. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $46.23.
Is now the time to buy AZEK? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: UFP Industries (NASDAQ: UFPI)
Beginning as a lumber supplier in the 1950s, UFP Industries (NASDAQ: UFPI) is a holding company making building materials for the construction, retail, and industrial sectors.
UFP Industries reported revenues of $1.65 billion, down 9.8% year on year, falling short of analysts’ expectations by 6.5%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
UFP Industries delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 16.2% since the results and currently trades at $110.24.
Read our full analysis of UFP Industries’s results here.
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 $1.33 billion, up 5.9% year on year. This result came in 3.3% below analysts' expectations. Overall, it was a softer quarter as it also logged a significant miss of analysts’ organic revenue estimates.
The stock is down 18.7% since reporting and currently trades at $372.79.
Read our full, actionable report on Carlisle here, it’s free.
Sherwin-Williams (NYSE: SHW)
Widely known for its success in the paint industry, Sherwin-Williams (NYSE: SHW) is a manufacturer of paints, coatings, and related products.
Sherwin-Williams reported revenues of $6.16 billion, flat year on year. This number lagged analysts' expectations by 0.6%. It was a softer quarter as it also produced a significant miss of analysts’ adjusted operating income estimates.
The stock is down 11.6% since reporting and currently trades at $337.50.
Read our full, actionable report on Sherwin-Williams here, it’s free.
Market Update
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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