BLDR - Simpson Manufacturing: Not Chasing This Rally

2024-07-21 12:27:13 ET

Summary

• Today, we take our first look at Simpson Manufacturing Co., Inc., a company heavily involved in the construction industry.
• The stock has moved up nearly 15% from lows earlier in the month due to increasing optimism about a Fed Funds rate cut and sector rotation in the market.
• However, Q1 results missed expectations, little profit or sales growth is projected in FY2024 and key end markets are seeing considerable pressure.
• An analysis around Simpson Manufacturing follows in the paragraphs below.

Today, we put Simpson Manufacturing Co., Inc. ( SSD ) in the spotlight for the first time. The company is heavily involved in the construction industry, which is seeing headwinds from mortgage rates that have more than doubled since the Federal Reserve started to lift interest rates back in March of 2022. In addition, several parts of commercial real estate are under pressure, notably office and retail. In addition, management at Builders FirstSource ( BLDR ) guided they projected that multi-family housing starts would drop 20% to 30% in 2024 based on the area the huge building supply firm serves. I noted that in an article on Builders FirstSource in early April....

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