BECN - Embedded Expectations Analysis - 2020 08 13
Beacon Roofing Supply, Inc. (BECN:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 17.2x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management may be concerned about cost reduction, the macro environment, and business efficiencySpecifically, management may lack confidence in their ability to meet their adjusted EBITDA guidance, sustain gross margin improvements, and continue reducing variable costs. They may also have concerns about the impact of seasonal demand, delivery headwinds in various geographies, and macro pressures to their on-site activities. In addition, they may be exaggerating Beacon 3D's ability to minimize interactions between contractors and clients and their ability to improve efficiency across all branches, including the bottom quintile of performers. They may also lack confidence in their ability to sustain their same-day organic growth rates, execute their rebranding process, and utilize their earnings rights for the OTC networks. Finally, they may have concerns about the continued slowdown of the new residential starts, volatile order trends, and increasing accounts receivables
Beacon Roofing Supply is a distributor of roofing materials and complementary building products in the United States and Canada. The complementary building products the company distributes include siding, windows, insulation, waterproofing systems, wallboard, acoustical ceilings, and other exterior and interior building products. The company purchases products from manufacturers and then distributes these goods to a customer base consisting of contractors, and to a lesser extent, home builders, retailers, and other building materials suppliers. The company supports its customers with services such as advice and assistance on product identification, specification and technical support, and training services.
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