The AZEK Company Inc. AZEK is scheduled to report second-quarter fiscal 2024 results on May 8 after the closing bell.
In the last reported quarter, the company’s adjusted earnings and net sales topped the Zacks Consensus Estimate by 100% and 2.7%, respectively.
The company’s earnings surpassed expectations in each of the trailing four quarters, the average surprise being 41%.
The Trend in Estimate Revision
The Zacks Consensus Estimate for AZEK’s fiscal second-quarter adjusted earnings per share has moved up to 38 cents from 37 cents over the past 30 days. The estimated figure suggests a rise of 111.1% from the year-ago quarter’s adjusted earnings of 18 cents per share.
The AZEK Company Inc. Price and EPS Surprise
The AZEK Company Inc. price-eps-surprise | The AZEK Company Inc. Quote
The consensus estimate for net sales is pegged at $414.7 million, indicating a 9.8% increase from the prior-year period’s reported value of $377.7 million.
Factors at Play
Revenues
AZEK’s top line in the second quarter of fiscal 2024 is expected to have increased year over year on the back of the robust performance of its Residential segment. The segment’s performance is likely to have been primarily driven by material conversion, execution of recent shelf space gains and new product innovations across the company’s product portfolio. The demand uptrend in product categories, especially Deck, Rail & Accessories and Exteriors categories, is expected to have aided the growth.
On the other hand, soft contributions from the Commercial segment due to the divestiture of AZEK’s Vycom business are likely to have hindered growth. Nonetheless, the aforementioned tailwinds are expected to have more than offset this headwind, resulting in top-line growth.
The company expects total net sales to be between $407 million and $413 million.
The Zacks Consensus Estimate for the Residential segment’s net sales is pegged at $396 million, reflecting year-over-year growth of 15.8%. The consensus mark for the Commercial segment’s net sales is pegged at $16.8 million, down from $35.6 million reported a year ago.
The company remains optimistic about its strategic growth initiatives and long-term material conversion opportunities in the large and fast-growing outdoor living and home exterior markets. It believes that these factors are likely to enhance its top-line performance and position it well to foster growth trends in the near term.
Margins
The bottom line of AZEK is likely to have benefited year over year on the back of normalized manufacturing utilization and material savings. Furthermore, the company’s key margin enhancement initiatives, including recycling and continuous improvement programs through the AZEK Integrated Management System, added to the uptick.
For the second quarter of fiscal 2024, the company expects adjusted EBITDA and adjusted EBITDA margin to be in the ranges of $108 to $112 million and 26.5% to 27.1%, respectively. In the year-ago quarter, the company reported an adjusted EBITDA of $72.8 million and an adjusted EBITDA margin of 19.3%.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for AZEK this time around. The company does not have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat.
Earnings ESP: AZEK has an Earnings ESP of -1.99%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently has a Zacks Rank of 2.
Stocks Poised to Beat Earnings
Here are some companies in the Zacks Construction sector, which have the right combination of elements to post an earnings beat.
Louisiana-Pacific Corporation LPX currently has an Earnings ESP of +3.56% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
LPX’s earnings for the to-be-reported quarter are expected to gain 232.4% from last year’s quarter’s reported figure. The company reported better-than-expected earnings in three of the last four quarters and missed on the remaining one occasion, the average surprise being 106.2%.
Trex Company, Inc. TREX currently has an Earnings ESP of +3.32% and a Zacks Rank of 3.
TREX’s earnings for the to-be-reported quarter are expected to increase 89.5% from last year’s quarter’s reported figure. The company reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 17.1%.
TopBuild Corp. BLD currently has an Earnings ESP of +1.47% and has a Zacks Rank of 2.
BLD’s earnings topped the Zacks Consensus Estimate in the last four quarters, the average surprise being 12.4%. Earnings for the to-be-reported quarter are expected to increase 4.6% from last year’s quarter’s reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Only $1 to See All Zacks’ Buys and Sells
We’re not kidding.
Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.
Thousands have taken advantage of this opportunity. Thousands did not – they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.
Louisiana-Pacific Corporation (LPX) : Free Stock Analysis Report
Trex Company, Inc. (TREX) : Free Stock Analysis Report
TopBuild Corp. (BLD) : Free Stock Analysis Report
The AZEK Company Inc. (AZEK) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
