CNM - Core & Main: Post-Earnings Correction Is A Buying Opportunity
2024-06-06 09:27:26 ET
Summary
- Core & Main, Inc. is expected to experience good revenue growth due to strength in non-residential construction, municipal repair and replacement, and the residential end market.
- Margins may face near-term headwinds from competitive pressures and growth investments, but long-term margin expansion prospects are attractive.
- The company's revenue outlook remains positive, with healthy demand in various end markets and potential growth from the Infrastructure Investment and Jobs Act.
Investment Thesis
Core & Main, Inc. ( CNM ) is up over 30% since my last article in December when I upgraded my rating to a buy. The stock was doing even better but has given away some of the gain after the recent results . Moving forward, the company should continue to deliver good revenue growth. The company’s revenue growth should benefit from the strength in the non-residential construction end market driven by the recent reshoring trend. Further, the municipal repair and replacement end market remains resilient, supported by healthy municipal budgets and the need to upgrade the aged water infrastructure following years of underinvestment. In addition, increased deployment of IIJA funding, strong execution in terms of introducing new product lines and expanding geographically, benefits from M&As, and a potential acceleration in the housing end market as the interest rate cycle reverses should also drive revenue growth in the coming years....
Core & Main: Post-Earnings Correction Is A Buying Opportunity