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NCI Building (NCS) Up 24% in 3 Months: What's Driving It?

Zacks Equity Research
Updated

Shares of NCI Building Systems Inc. NCS have gained around 35% in the last three months. The company has also significantly outperformed its industry’s growth of 11%.

NCI Building Systems has a market cap of roughly $1.28 billion. Average volume of shares traded in the last three months is around 612.5K.

The company has an impressive earnings surprise history beating the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive surprise of 9.74%.



Let’s take a look into the factors that are driving this Zacks Rank #3 (Hold) stock.

Driving Factors

NCI Building Systems recently reported adjusted earnings of 32 cents per share for fourth-quarter fiscal 2017 (ended Oct 29, 2017), up 14% from 28 cents recorded in the prior-year quarter. Earnings beat the Zacks Consensus Estimate of 31 cents despite the negative impact of job site disruptions, uneven production flow and increased transportation costs related to the various hurricanes.

For first-quarter fiscal 2018, NCI Building Systems estimates revenues to be in the range of $390-$410 million and adjusted EBITDA to be in the $24-$34 million range. It expects gross margins to improve in fiscal 2018 year due to improvements in cost structure. The company remains confident that fiscal 2018 will be a better year than fiscal 2017. It is poised to gain from success in leveraging IMP (insulated metal panel) product sales to the Components and Building groups. It projects business to improve over the next 12 to 18 months.

NCI Building Systems expects low-rise non-residential construction starts in fiscal 2018 to grow in mid-single digits, with the adjustable markets for legacy businesses projected to be up in the range of 2-4%. The company’s IMP product lines are anticipated to continue growing at a low-double digit rate based on solid underlying demand.

The company is well poised for long-term growth on the back of rising demand for key products and strategic actions. The company is focused on investments in automation and process innovation which will slash operating costs, improve margins, quality and service, and enhance long-term operational flexibility. It will also focus on continued improvement in manufacturing, and delivering cost reductions with the Lean and Six Sigma initiatives across the entire business. The step will reduce excess operational back-office costs and simplify the business. Finally, NCI Building Systems’ focus on growth strategy around IMP and its ability to drive adjacent products across the engines of legacy distribution channels will support the company’s performance.

NCI Building Systems, Inc. Price and Consensus
 

NCI Building Systems, Inc. Price and Consensus | NCI Building Systems, Inc. Quote

Estimates for fiscal 2018 and 2019 for NCI Building Systems have moved up in the past 30 days, reflecting the optimistic outlook of analysts. The estimate for fiscal 2017 has gone up 2% to $1.07, which reflects year-over-year growth of 33.75%. The Zacks Consensus Estimate for earnings for fiscal 2019 has also moved north 5% to $1.39, a projected year-over-year growth of 29.91%.

Stocks to Consider

Some better-ranked stocks worth considering in the same sector are EMCOR Group, Inc. EME, NVR, Inc. NVR and Thor Industries, Inc. THO. All these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Emcor Group has an average positive earnings surprise of 16.96% in the trailing four quarters. Its shares have gained 20.2% in the past three months.

NVR, Inc. generated an average positive earnings surprise of 17.17% in the past four quarters. Its shares clocked a 20.96% gain in the last three months.

Thor Industries has an average positive earnings surprise of 15.34% in the last four quarters. The company’s shares surged 31.7% in the last three months.

Zacks Editor-in-Chief Goes "All In" on This Stock

Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.

Download it free >>


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NCI Building Systems, Inc. (NCS) : Free Stock Analysis Report
 
EMCOR Group, Inc. (EME) : Free Stock Analysis Report
 
Thor Industries, Inc. (THO) : Free Stock Analysis Report
 
NVR, Inc. (NVR) : Free Stock Analysis Report
 
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Zacks Investment Research