Shares of NCI Building Systems Inc. (NCS) hit a new 52-week high of $19.94 and closed at $19.69 at the end of trading on Jan 17, 2014. The stock delivered a one-year return of about 31%, and year-to-date return of about 12.3%, outperforming the S&P 500. The average volume of shares traded over the last three months was roughly 413K.
Texas-based NCI Building is a metal building components maker with a market cap of roughly $1.47 billion and long-term expected earnings growth of 10%. Over the past 52 weeks, NCI Building has ranged from a 52-Week low of $11.22 on Sep 5, 2013 to the 52-week high of $19.94.
Growth Drivers
NCI Building’s share price went up, following its announcement of an underwritten public offering of 8.5 million to enhance its liquidity on Jan 6. Prior to this, share price of NCI Building had been trending upwards since its fourth-quarter fiscal 2013 (ended Nov 3, 2013) earnings announcement on Dec 10. Adjusted earnings rose 25% year over year to 10 cents per share in the quarter and beat the Zacks Consensus Estimate of 7 cents. For fiscal 2013, NCI Building Systems reported break-even earnings versus the year-ago loss of 25 cents.
The market has reacted favorably to NCI Building’s recent booking trends. The recent additions to the company’s backlog in the quarter continue to reflect a number of larger projects and projects with higher margins. This bodes well for the company going ahead.
The company also anticipates improved margins in fiscal 2014, driven by greater commercial discipline, manufacturing efficiency and volume-driven operating leverage. The company also believes that the benefit of improved pricing will be reflected in orders that are shipped in the first half of 2014.
The company noted that business conditions at architectural firms have steadily improved in the past several quarters. This points toward a high single-digit year-over-year growth in nonresidential new construction in 2014.
The Coatings group continues to be positively impacted by higher volumes and expanding margins. Further, the Middletown, Ohio-based light gauge paint line ramped up production and was profitable in the fourth quarter of 2013. The company also witnessed a pick-up in demand, mainly from the commercial, industrial and agricultural sectors
Currently, NCI Building carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some better-ranked stocks in the same sector include United Rentals, Inc. (URI), Builders FirstSource, Inc. (BLDR) and Lumber Liquidators Holdings, Inc. (LL). All of these carry a Zacks Rank #2 (Buy).
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