EXP - Eagle Materials: Good Growth Prospects And A Reasonable Valuation

2024-06-27 16:46:34 ET

Summary

• Eagle Materials Inc. is expected to see revenue and margin growth, with a favorable outlook in the cement and wallboard businesses.
• Adverse weather impacted cement volumes last quarter, but price increases and volume recovery are expected to drive current quarter revenues.
• Strong demand fundamentals, pricing environment, and cost reduction efforts support a buy rating on the stock with the potential for a P/E multiple re-rating.

Investment Thesis

Eagle Materials Inc. ( EXP ) should deliver good revenue and margin growth moving forward. The adverse weather impacted volumes in the cement business last quarter and delayed the implementation of price hikes in half of its geographies. However, I expect the current quarter’s revenues to benefit from price increases and volume recovery as the weather-related headwinds fade. The medium to long-term outlook in the cement business remains attractive, with tailwinds from federal infrastructure and non-residential construction spending driving cement demand. Further, the company is investing in capacity expansion to meet this demand, including the recently announced Laramie cement plant expansion....

For further details see: