Zacks Industry Outlook Highlights Arcosa, Armstrong World Industries, Frontdoor, Construction Partners and Latham

Zacks Equity Research
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For Immediate Release

Chicago, IL – November 6, 2024 – Today, Zacks Equity Research discusses Arcosa, Inc. ACA, Armstrong World Industries, Inc. AWI, Frontdoor, Inc. FTDR, Construction Partners, Inc. ROAD and Latham Group, Inc. SWIM.

Industry: Building Products

Link: https://www.zacks.com/commentary/2364534/5-building-products-stocks-for-better-returns-despite-the-industry-woes

The Zacks Building Products - Miscellaneous industry has been facing headwinds due to a challenging real estate market and the effects of inflation on consumer sentiment. Nonetheless, increased government infrastructure spending is bolstering companies in the industry. Although potential challenges like macroeconomic uncertainties, new product investments and rising raw material costs could squeeze margins, firms such as Arcosa, Inc., Armstrong World Industries, Inc., Frontdoor, Inc., Construction Partners, Inc. and Latham Group, Inc. stand to gain from operational excellence, geographic and product diversification strategies, strategic acquisitions, and higher infrastructure investments.

Industry Description

The Zacks Building Products - Miscellaneous industry primarily comprises manufacturers, designers and distributors of home improvement and building products like ceiling systems, doors, windows, flooring and metal products. Some industry players provide solutions to rehabilitate the aging infrastructure, primarily pipelines in the wastewater, water, energy, mining and refining industries.

The companies also manufacture expansion joints and structural bearings, ventilation products, ground-mounted solar racking and commercial greenhouses, as well as mail storage (solutions including mailboxes along with package delivery products). Companies in this industrial cohort also rent out equipment to a diverse customer base, including construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities.

3 Trends Shaping the Future of the Building Products Industry

Rising Costs: Inflationary headwinds with respect to transportation costs, material costs and energy costs have been a pressing concern. Also, rising labor costs are compressing margins. These are dampening the companies' operating performance. Although the industry participants have been working to recover higher costs through various price increases, they expect this ongoing volatility in material and transportation costs to be a concern.

Apart from higher raw material costs, the companies bear expenses related to product launches. If companies are unable to offset these costs through price increases or supply-chain initiatives, their profits may be affected.

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