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Wrapping up Q2 earnings, we look at the numbers and key takeaways for the home construction materials stocks, including American Woodmark (NASDAQ:AMWD) 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 slower Q2. As a group, revenues missed analysts’ consensus estimates by 2.4% while next quarter’s revenue guidance was 22.9% below.
Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
In light of this news, home construction materials stocks have held steady with share prices up 4.4% on average since the latest earnings results.
American Woodmark (NASDAQ:AMWD)
Starting as a small millwork shop, American Woodmark (NASDAQ:AMWD) is a cabinet manufacturing company that helps customers from inspiration to installation.
American Woodmark reported revenues of $459.1 million, down 7.9% year on year. This print fell short of analysts’ expectations by 3.4%. Overall, it was a softer quarter for the company with a miss of analysts’ earnings estimates.
“Our team delivered net sales growth in the new construction market, but this was more than offset by weaker than projected demand in the remodel market,” said Scott Culbreth, President and CEO.
Unsurprisingly, the stock is down 9.2% since reporting and currently trades at $90.67.
Read our full report on American Woodmark here, it’s free.
Best Q2: 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.