Unpacking Q2 Earnings: Trex (NYSE:TREX) In The Context Of Other Home Construction Materials Stocks

Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Trex (NYSE:TREX) and its peers.

Traditionally, home construction materials companies have built economic moats with expertise in specialized areas, brand recognition, and strong relationships with contractors. More recently, advances to address labor availability and job site productivity have spurred innovation that is driving incremental demand. However, these companies are at the whim of residential 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 home construction materials companies.

The 12 home construction materials stocks we track reported a satisfactory Q2. As a group, revenues missed analysts’ consensus estimates by 0.9% while next quarter’s revenue guidance was in line.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 5.4% since the latest earnings results.

Trex (NYSE:TREX)

Addressing the demand for aesthetically-pleasing and unique outdoor living spaces, Trex Company (NYSE:TREX) makes wood-alternative decking, railing, and patio furniture.

Trex reported revenues of $387.8 million, up 3% year on year. This print exceeded analysts’ expectations by 2.8%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ organic revenue and revenue estimates.

“Our prominent position in both the pro channel and home centers enabled Trex to deliver another quarter of sales performance that exceeded expectations,” said Bryan Fairbanks, President and CEO.

Unsurprisingly, the stock is down 17.8% since reporting and currently trades at $53.

Is now the time to buy Trex? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q2: Masco (NYSE:MAS)

Headquartered just outside of Detroit, MI, Masco (NYSE:MAS) designs and manufactures home-building products such as glass shower doors, decorative lighting, bathtubs, and faucets.

Masco reported revenues of $2.05 billion, down 1.9% year on year, outperforming analysts’ expectations by 2.5%. The business had a stunning quarter with an impressive beat of analysts’ EBITDA estimates.

The market seems content with the results as the stock is up 2.5% since reporting. It currently trades at $67.40.

Is now the time to buy Masco? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q2: Gibraltar (NASDAQ:ROCK)

Gibraltar (NASDAQ:ROCK) makes renewable energy, agriculture technology and infrastructure products. Its mission statement is to make everyday living more sustainable.

Gibraltar reported revenues of $309.5 million, up 13.1% year on year, falling short of analysts’ expectations by 17.9%. It was a disappointing quarter as it posted full-year revenue and EPS guidance missing analysts’ expectations.

Gibraltar delivered the weakest performance against analyst estimates in the group. Interestingly, the stock is up 5.2% since the results and currently trades at $67.67.

Read our full analysis of Gibraltar’s results here.

Griffon (NYSE:GFF)

Initially in the defense industry, Griffon (NYSE:GFF) is a now diversified company specializing in home improvement, professional equipment, and building products.

Griffon reported revenues of $613.6 million, down 5.3% year on year. This result came in 5.6% below analysts' expectations. It was a slower quarter as it also produced a significant miss of analysts’ revenue estimates and full-year revenue guidance missing analysts’ expectations.

The stock is down 8.9% since reporting and currently trades at $75.08.

Read our full, actionable report on Griffon here, it’s free for active Edge members.

JELD-WEN (NYSE:JELD)

Founded in the 1960s as a general wood-making company, JELD-WEN (NYSE:JELD) manufactures doors, windows, and other related building products.

JELD-WEN reported revenues of $823.7 million, down 16.5% year on year. This print topped analysts’ expectations by 1.7%. It was an exceptional quarter as it also recorded a beat of analysts’ EPS and EBITDA estimates.

JELD-WEN scored the highest full-year guidance raise but had the slowest revenue growth among its peers. The stock is down 2.9% since reporting and currently trades at $4.51.

Read our full, actionable report on JELD-WEN here, it’s free for active Edge members.

Market Update

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.

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