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Beacon Roofing Supply (BECN)
:BECN
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Beacon Roofing Supply
(NASDAQ:BECN)
72Outperform
Positive Factors
Acquisition
Beacon's stock is up 7%, indicating investor confidence in the deal closing.
Financial Performance
Beacon Roofing Supply reported 4Q24 results in line with consensus expectations with net sales growing ~4.5% and adjusted EBITDA ~2.7% to set new 4Q records for the company.
Operational Efficiency
The company's pursuit of cost-saving and productivity initiatives resulted in the highest 4Q sales/hour on record and are expected to yield significant annual savings.
Negative Factors
Housing Market
The pathway to intrinsic value has become tougher with housing demand flat or down and the timeline on rebound getting pushed out.
Weather Impact
Severe winter weather across large portions of the country has impacted the industry and Beacon's experience, with 1Q25 sales expected to be down 3-5%.
Beacon Roofing Supply (BECN) vs. S&P 500 (SPY)
Market Cap
$7.61B
Dividend YieldN/A
Average Volume (3M)3.74M
Price to Earnings (P/E)21.6
Beta (1Y)1.06
Revenue Growth7.05%
EPS GrowthN/A
CountryUS
Employees8,068
SectorIndustrials
Sector Strength70
IndustryConstruction
Share Statistics
EPS (TTM)5.70
Shares Outstanding61,787,400
10 Day Avg. Volume4,552,754
30 Day Avg. Volume3,741,239
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.78
Price to Cash Flow (P/CF)5.30
P/FCF Ratio5.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$126.67Price Target Upside2.86% Upside
Rating ConsensusHold
Number of Analyst Covering10
Beacon Roofing Supply Business Overview & Revenue Model
Company DescriptionBeacon Roofing Supply, Inc. (BECN) is a leading distributor of commercial and residential roofing products and complementary building materials. Headquartered in Herndon, Virginia, the company operates across a vast network of locations throughout North America. Beacon serves contractors, homebuilders, and retail customers, providing a wide array of products, including roofing shingles, insulation, and waterproofing materials. Its extensive product offering, combined with value-added services, positions Beacon as a key player in the building materials market.
How the Company Makes MoneyBeacon Roofing Supply generates revenue primarily through the sale of roofing materials and complementary building products. The company operates a network of branches that supply both commercial and residential customers. Key revenue streams include the sale of roofing shingles, insulation, and accessories, as well as related services such as product delivery and support. Beacon also benefits from strategic partnerships with leading manufacturers in the industry, which ensure a steady supply of innovative and high-quality products. Additionally, its ability to offer a comprehensive product range and responsive customer service helps to drive repeat business and customer loyalty.
Beacon Roofing Supply Financial Statement Overview
Summary
Beacon Roofing Supply shows strong revenue growth and efficient operations but faces margin pressures and increasing leverage. The balance sheet remains stable, but rising debt levels pose risks. Cash flow concerns are evident due to decreased free cash flow, indicating potential liquidity issues.Income Statement
Beacon Roofing Supply has demonstrated consistent revenue growth with a 7.06% increase in 2024 compared to 2023. The Gross Profit Margin improved to 25.65% in 2024, reflecting efficient cost management. The Net Profit Margin decreased slightly to 3.70% from 4.77% due to a decline in EBIT and EBITDA margins. Overall, the company shows strong revenue growth trends but faces margin pressures.82
Very Positive
Balance Sheet
The company's Debt-to-Equity Ratio increased to 1.74 in 2024, indicating higher leverage but within industry norms. Return on Equity decreased to 18.15%, reflecting reduced profitability. The Equity Ratio stands at 28.66%, showcasing a stable capital structure despite rising debt levels. The balance sheet is stable but with increasing leverage.75
Positive
Cash Flow
Free Cash Flow fell by 55.96% in 2024, indicating reduced cash generation. The Operating Cash Flow to Net Income Ratio is strong at 1.16, suggesting efficient cash operations. However, the Free Cash Flow to Net Income Ratio decreased to 0.81, highlighting challenges in converting earnings into free cash flow. Cash flow stability is a concern with declining free cash flow.68
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Sep 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 9.76B | 9.12B | 8.43B | 6.82B | 6.94B | Gross Profit |
| 2.50B | 2.34B | 2.24B | 1.82B | 1.70B | EBIT |
| 665.40M | 719.60M | 703.40M | 468.10M | 35.10M | EBITDA |
| 858.70M | 895.80M | 862.60M | 652.00M | 426.20M | Net Income Common Stockholders |
| 361.70M | 435.00M | 458.40M | 243.00M | -80.90M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 74.30M | 84.00M | 67.70M | 225.80M | 624.60M | Total Assets |
| 6.95B | 6.21B | 6.00B | 5.55B | 6.96B | Total Debt |
| 3.46B | 2.92B | 2.43B | 2.07B | 3.20B | Net Debt |
| 3.39B | 2.84B | 2.36B | 1.84B | 2.57B | Total Liabilities |
| 4.96B | 4.38B | 3.70B | 3.34B | 4.80B | Stockholders Equity |
| 1.99B | 1.82B | 2.30B | 2.21B | 2.16B |
| Cash Flow | Free Cash Flow | |||
| 292.80M | 664.90M | 311.00M | 94.90M | 430.80M | Operating Cash Flow |
| 419.40M | 787.80M | 401.10M | 166.70M | 479.30M | Investing Cash Flow |
| -540.50M | -225.60M | -395.60M | 716.40M | -39.00M | Financing Cash Flow |
| 112.80M | -546.40M | -162.50M | -1.12B | 112.20M |
Beacon Roofing Supply Technical Analysis
Positive
123.15
Price Trends
119.52
Positive
114.20
Positive
102.60
Positive
Market Momentum
2.17
Negative
66.62
Neutral
96.27
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BECN, the sentiment is Positive. The current price of 123.15 is above the 20-day moving average (MA) of 123.00, above the 50-day MA of 119.52, and above the 200-day MA of 102.60, indicating a bullish trend. The MACD of 2.17 indicates Negative momentum. The RSI at 66.62 is Neutral, neither overbought nor oversold. The STOCH value of 96.27 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for BECN.
Beacon Roofing Supply Risk Analysis
Beacon Roofing Supply disclosed 19 risk factors in its most recent earnings report. Beacon Roofing Supply reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Beacon Roofing Supply Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $6.65B | 47.63 | 10.73% | ― | 6.59% | 30.00% | |
72 Outperform | $7.61B | 21.60 | 18.96% | ― | 7.05% | ― | |
72 Outperform | $4.65B | 18.51 | 37.31% | 0.84% | 5.86% | 5.81% | |
71 Outperform | $11.89B | 18.87 | 12.63% | 1.85% | 13.41% | -44.36% | |
65 Neutral | $13.75B | 13.37 | 23.88% | ― | -4.08% | -24.71% | |
65 Neutral | $2.76B | 20.17 | 10.37% | ― | 3.71% | -49.38% | |
62 Neutral | $7.62B | 13.01 | 3.19% | 3.32% | 3.77% | -14.28% |
* Industrials Sector Average
Performance Comparison
BECN
Beacon Roofing Supply
123.15
26.89
27.93%
BLDR
Builders Firstsource
120.90
-63.65
-34.49%
OC
Owens Corning
139.02
-22.34
-13.84%
IBP
Installed Building Products
168.48
-64.70
-27.75%
GMS
GMS
72.79
-21.57
-22.86%
AZEK
AZEK Company
47.43
1.17
2.53%
Beacon Roofing Supply Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: 6.16% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
Beacon delivered a record fourth quarter and made substantial progress on its Ambition 2025 plan, including strong growth in digital and private label sales. However, challenges in residential roofing demand, commercial roofing headwinds, and cost management were notable lowlights. The sentiment is balanced with significant achievements and existing challenges.Highlights
Record Fourth Quarter Performance
Beacon set fourth quarter records for net sales, adjusted EBITDA, and cash flow despite challenges in certain markets. Sales per day were up approximately 3% year-over-year to $2.4 billion driven by contributions from recently acquired branches.
Ambition 2025 Plan Progress
Significant progress on the Ambition 2025 plan was made, with sales growth of more than 7% to nearly $9.8 billion and generating more than $930 million in adjusted EBITDA. Private label sales grew approximately 7% in the fourth quarter.
Digital Sales Growth
Digital sales grew approximately 20% year-over-year in the fourth quarter, with digital sales as a percentage of total sales reaching approximately 16%, nearly a 200 basis point improvement year-over-year.
Greenfield and Acquisition Contributions
The 17 greenfields from the class of 2022 contributed nearly $22 million to EBIT in full year 2024. Acquired branches from the class of 2022 delivered double-digit EBITDA margins in 2024.
Cash Flow and Share Repurchase
Record operating cash flow of $360 million was generated in the fourth quarter, and over $1.5 billion was deployed to share buybacks since the start of Ambition 2025, reducing the as-converted share count by more than 23%.
Lowlights
Residential Roofing Demand Slowdown
Residential roofing sales were lower by less than 1% on a per day basis, impacted by weather patterns and lower organic volumes.
Commercial Roofing Headwinds
Nonresidential sales per day increased by nearly 4%, but prices declined by low single digits year-over-year. Architectural Billing Index indicates contraction in new construction activity in the first half of the year.
Inventory and Cost Management Challenges
Inventory management was below expectations, contributing to operating cash flow being lower than anticipated. There were delays in adjusting inventory and overhead to changing market conditions.
QXO Tender Offer
QXO launched an unsolicited tender offer at $124.25 per share. The Board determined the offer significantly undervalues the company.
Company Guidance
During the Beacon Fourth Quarter and Full Year 2024 Earnings Call, management provided guidance for 2025, projecting mid-single-digit sales growth driven by a combination of acquisitions, greenfield expansions, and organic growth. The company anticipates adjusted EBITDA to range between $950 million and $1.03 billion, with expectations for price-cost neutrality across the year. The first quarter is expected to see a 3% to 5% decline in sales per day due to harsh weather conditions, but full-year gross margin is anticipated to align with the previous year, supported by structural improvements in pricing, private label, and digital sales. Beacon plans to open 15 to 20 new greenfield locations, primarily in OTC markets, and continue executing its tuck-in acquisition strategy, while maintaining a focus on operational efficiency and productivity to drive margin expansion. Additionally, the company aims to generate operating cash flow between $500 million and $600 million for the year.Beacon Roofing Supply Corporate Events
M&A TransactionsBusiness Operations and Strategy
Beacon Roofing Supply Adopts Stockholder Rights Agreement
Neutral
Jan 28, 2025
On January 27, 2025, Beacon Roofing Supply’s Board of Directors adopted a stockholder rights agreement in response to a tender offer by QXO, Inc. The agreement aims to protect Beacon and its stockholders from hostile takeovers by requiring potential acquirers to pay a fair control premium. This rights plan, set to expire on January 26, 2026, aligns with similar strategies used by publicly-held companies and is designed to provide the Board with sufficient time to evaluate QXO’s offer, which they previously rejected as undervalued.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.