Arcosa’s Strong Sell Rating Reflects Ongoing Challenges
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Currently, the Zacks Building Products-Miscellaneous Industry ranks in the bottom 19% of 246 Zacks industries, indicating significant concerns. Arcosa ACA has earned a Zacks Rank #5 (Strong Sell) and is identified as the “Bear of the Day.”
The infrastructure product manufacturer is grappling with several operational issues amid daunting market conditions. Recently, the Indiana Department of Environmental Management (IDEM) issued a notice to Arcosa’s aggregates division (Arcosa Lightweight) regarding possible emissions violations.
Disappointing Q4 Performance
In early February, Arcosa reported its Q4 results, with sales increasing by 14% year-over-year to $666.2 million. However, this figure fell short of estimates of $694.2 million by 4%.
More troubling, Arcosa noted a net income loss of $7.7 million in contrast to a profit of $27.1 million in Q4 2023. The adjusted earnings per share (EPS) for Q4 was $0.46, a significant drop from last year’s $0.68, and 42% below expectations of $0.79.
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Declining EPS Estimates and Elevated P/E Ratios
In the past 30 days, EPS estimates for fiscal 2025 have been reduced by 13%, dropping from $4.81 to $4.56. This negative revision trend may persist following the company’s recent earnings miss, further impacting investor sentiment.
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Arcosa’s stock trades at a forward earnings multiple of 20.1X, which is above the industry average of 16.8X. Competitors such as CRH plc CRH and TopBuild BLD also feature in the sector, indicating there may be more competitive pricing pressures ahead.
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Conclusion
Arcosa’s ability to meet ambitious earnings growth expectations for FY25 remains uncertain. Continuous declines in earnings estimates may indicate further downside risks for ACA shares.
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Arcosa, Inc. (ACA) : Free Stock Analysis report
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This article originally published on Zacks Investment Research (zacks.com).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
