Wrapping up Q2 earnings, we look at the numbers and key takeaways for the building materials stocks, including Armstrong World (NYSE: AWI) 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 8 building materials stocks we track reported a slower Q2. As a group, revenues beat analysts’ consensus estimates by 1% while next quarter’s revenue guidance was in line.
Thankfully, share prices of the companies have been resilient as they are up 8.2% on average since the latest earnings results.
Best Q2: 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. This print exceeded analysts’ expectations by 5.2%. Overall, it was a stunning quarter for the company with a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EBITDA estimates.
“With strong performance across our enterprise, we delivered robust top and bottom-line growth with margin expansion in both our Mineral Fiber and Architectural Specialties segments,” said AWI President and CEO, Vic Grizzle.
Armstrong World delivered the weakest full-year guidance update of the whole group. Interestingly, the stock is up 18.8% since reporting and currently trades at $200.72.
Resideo (NYSE: REZI)
Resideo Technologies, Inc. (NYSE: REZI) is a manufacturer and distributor of technology-driven products and solutions for home comfort, energy management, water management, and safety and security.
Resideo reported revenues of $1.94 billion, up 22.3% year on year, outperforming analysts’ expectations by 6.1%. The business had an exceptional quarter with EBITDA guidance for next quarter exceeding analysts’ expectations.
Resideo delivered the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 62% since reporting. It currently trades at $42.54.
Is now the time to buy Resideo? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q2: 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’ revenue and EBITDA estimates.
As expected, the stock is down 19.4% since the results and currently trades at $329.71.
Read our full analysis of Carlisle’s results here.
Vulcan Materials (NYSE: VMC)
Founded in 1909, Vulcan Materials (NYSE: VMC) is a producer of construction aggregates, primarily crushed stone, sand, and gravel.
Vulcan Materials reported revenues of $2.10 billion, up 4.4% year on year. This result came in 4.8% below analysts' expectations. It was a disappointing quarter as it also produced a significant miss of analysts’ revenue and adjusted operating income estimates.
Vulcan Materials had the weakest performance against analyst estimates among its peers. The stock is up 11.6% since reporting and currently trades at $304.43.
Read our full, actionable report on Vulcan Materials here, it’s free for active Edge members.
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 $6.31 billion, flat year on year. This number met analysts’ expectations. Aside from that, it was a softer quarter as it produced full-year EPS guidance missing analysts’ expectations.
The stock is down 2.2% since reporting and currently trades at $334.58.
Read our full, actionable report on Sherwin-Williams here, it’s free for active Edge members.
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 thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), 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 potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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