Gibraltar Industries (ROCK) is an $800 million manufacturer and distributor of metal building products for the industrial, infrastructure and residential markets.
The stock is the cream of the crop along with Masco (MAS) in a Zacks industry that is struggling with other players such as USG Corp (USG), Caesar Stone (CSTE), and United Rentals (URI).
ROCK is North America’s leading manufacturer of ventilation products, mail storage solutions including mailboxes and package delivery products, bar grating, expansion joints and structural bearings, plus ground mounted solar racking and commercial greenhouses.
The company is divided into three reporting segments: Industrial and Infrastructure Products, Residential Products and Solar Mounting and Commercial Greenhouses.
Pedal to the Metal
As residential and commercial construction markets have stepped on the gas this year, Gibraltar has benefited greatly. In the company’s recent Q3 earnings report, net sales for the third quarter of 2015 increased 30 percent to $305.0 million, compared with $234.1 million in the third quarter of 2014.
Adjusted net income was $15.7 million, or $0.50 per diluted share, compared with $9.5 million, or $0.30 per diluted share, in the third quarter of 2014.
That $0.50 EPS represented the company’s sixth consecutive earnings beat. Below is a look at how quickly analysts have scrambled to catch up to ROCK’s earnings growth by raising their estimates.
This is the Zacks proprietary Price & Consensus chart showing the change in consensus estimates for a give year plotted against the stock price…
As you can see, the stock move higher this year was built on the back of rising estimates. Zacks followers know this because ROCK shares became a Zacks #1 Rank (Strong Buy) in July and this was reiterated in August and October as analysts had to keep revising higher.
Global Metal ROCK-er
Gibraltar operates facilities in the United States, Canada, England and Germany.
In the Industrial and Infrastructure Products segment, Gibraltar is the self-described market leader in the fabrication of metal bar grating that is used in the oil and gas, manufacturing, chemical processing and leisure/sports park markets. The company also claims leadership in engineered bearings and joints used in bridge construction, roads, and airport runways.
It seems that the company’s diverse product segments and lines and international markets has shielded it from the downturn in oil & gas industry construction needs.
Gibraltar also has a leading position in the production of expanded and perforated metal which is used in a wide variety of applications within commercial construction, transportation and petrochemical markets.
In the Residential Products segment, Gibraltar serves the ventilation and air management market with a variety of roof, foundation and interior ventilation products, plus rain dispersion and outdoor comfort products. It also provides postal and parcel solutions for single and multi-family residences and large and small commercial centers. These products include single unit mailboxes, centralized mailboxes and electronic package lockers.
Going Green is Nothing New
A Gibraltar subsidiary, Rough Brothers Inc., has designed, manufactured and installed educational and commercial greenhouses, garden centers and conservatories since 1932. Their sole focus is building the custom greenhouses and conservatories that help commercial growers, retail garden centers, research facilities, universities and schools throughout the country.
RBI Solar, a sister company of Rough Brothers, designs, manufactures and installs solar mounting systems for commercial and utility scale solar projects. As a specialist in ground mount, roof mount, landfill and custom designed specialty solar structures, RBI provides best-in-class solar racking solutions and project management capabilities to serve project developers and system integrators.
Historically over 90% of the public conservatories in the United States were built by a firm called Lord & Burnham. To expand and enhance their conservatory design capabilities, in 1988 Rough Brothers acquired Lord & Burnham’s drawings, design details and equipment. As the company says, “This is just one more tool that allows Rough Brothers to deliver the precise and pristine detail requirements of conservatory and greenhouse construction, whether for new or historic greenhouse and conservatory restoration.”
The ROCK Bottom Line is Green Too
If you are looking for an investment to play the booming construction markets, this well-diversified small cap with strong double-digit EPS growth projected into next year should be at the top of your list.
Kevin Cook is a Senior Stock Strategist for Zacks where he runs the Follow The Money (FTM) portfolio.
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