Baird's Roofing Survey Positive For Beacon Roofing, Carlisle Quarterly EPS

The survey showed that growth was largely consistent quarter-over-quarter, as the favorable effect of weather last quarter was replaced by storm-driven demand this quarter. The distributors also characterized demand trends as healthy overall in non-storm affected markets.

Regarding shingles, residential pricing increased very low-single-digits in the second quarter, reversing the continual declines seen over the past two-plus years and adding to low-single-digit volume growth.

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"We believe these results signal good 3QF16 results at BECN, and are also consistent with our residential re-roofing recovery thesis," analyst David Manthey wrote in a note.

"Finally, pricing is expected to remain stable-to-higher, which we believe could represent upside to Street expectations (we conservatively still model BECN residential pricing down modestly y/y near term)," Manthey added.

Expectations, Rating

The analyst expects Beacon to report EPS of $0.73 for the third quarter and $2.05 for the full year. Manthey maintains his Outperform rating and $55 price target on the stock.

Further, the survey suggests nonresidential volume growth was in the low-single-digit range, moderating from mid-single-digit growth in the first quarter as weather comparisons normalized.

"We think Q2 estimates are achievable, with CCM deceleration seemingly captured in consensus. Demand remains fairly solid, but with raw material deflation captured in expectations, we believe capital deployment is the next leg to the stock," analyst Timothy Wojs wrote in a note.

The analyst expects +4 percent year-over-year organic growth in Carlisle (consensus +3 percent), moderating from +9 percent in the first quarter. Wojs forecast EBIT margin of 20.5 percent (consensus 20.3 percent), up 110bps year-over-year driven by volume growth and lower raw materials.

Wojs, who maintains his Outperform rating and $108 price target on Carlisle's stock, sees EPS of $1.64 for the second quarter and $5.72 for the full year.

At the time of writing, shares of Beacon Roofing gained 0.97 percent to $46.63 and Carlisle were up 0.41 percent to $104.18.