KeyBanc Initiates Coverage on Beacon Roofing Supply (BECN) with a Hold; Current Risk/Reward Balanced
BECN Hot Sheet
Rating Summary:4 Buy, 3 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 16 | Down: 7 | New: 23
KeyBanc initiates coverage on Beacon Roofing Supply (Nasdaq: BECN) with a Hold rating.
KeyBanc analyst highlights positive points including:
1) BECN's consistent replacement business in both residential and non-residential roofing can offset a large portion of the cyclical volatility in new construction; 2) BECN is in the top three in terms of roofing distribution market share and plans to grow aggressively through acquisitions over the next several years; 3) A competitive advantage exists against smaller regional roofing distributors as their size allows for cost advantages withsuppliers, an expansive distribution footprint and the ability to hold a large inventory of different SKUs; & 4) The balance sheet and cash flow generation is solid with no liquidity issues; both will be used to grow the business organically and through acquisitions.
Some negatives that offset the positives are:
1) Although only 20-25% of revenues, new construction in the commercial sector remains weak, and although the new residential market appears to be stabilizing, it remains at a low level; 2) Assuming the 2009 hurricane season causes less damage vs. 2008 (which we are currently estimating), the Company remains on the sidelines in regard to acquisitions and if pricing remains the same (although it could modestly fall as costs are lower and demand remains soft) we estimate earnings will be down in FY10; 3) Acquisitions, a large part of the growth strategy, are typically dilutive to margins; & 4) The Company competes in highly competitive and fragmented industry.
To see more analyst ratings on BECN Click Here.
Beacon Roofing Supply, Inc. distributes residential and non-residential roofing materials in the United States and Canada.
KeyBanc analyst highlights positive points including:
1) BECN's consistent replacement business in both residential and non-residential roofing can offset a large portion of the cyclical volatility in new construction; 2) BECN is in the top three in terms of roofing distribution market share and plans to grow aggressively through acquisitions over the next several years; 3) A competitive advantage exists against smaller regional roofing distributors as their size allows for cost advantages withsuppliers, an expansive distribution footprint and the ability to hold a large inventory of different SKUs; & 4) The balance sheet and cash flow generation is solid with no liquidity issues; both will be used to grow the business organically and through acquisitions.
Some negatives that offset the positives are:
1) Although only 20-25% of revenues, new construction in the commercial sector remains weak, and although the new residential market appears to be stabilizing, it remains at a low level; 2) Assuming the 2009 hurricane season causes less damage vs. 2008 (which we are currently estimating), the Company remains on the sidelines in regard to acquisitions and if pricing remains the same (although it could modestly fall as costs are lower and demand remains soft) we estimate earnings will be down in FY10; 3) Acquisitions, a large part of the growth strategy, are typically dilutive to margins; & 4) The Company competes in highly competitive and fragmented industry.
To see more analyst ratings on BECN Click Here.
Beacon Roofing Supply, Inc. distributes residential and non-residential roofing materials in the United States and Canada.
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