Will Gibraltar (ROCK) Benefit from its Organic Growth?

On Dec 23 2014, we issued an updated research report on the premium steel & iron company Gibraltar Industries, Inc. ROCK. Though the company has a leading presence in the industry, thanks to its diversified product offering, its trade is exposed to several business risks within the same.

Factors to consider

Gibraltar Industries is focused on driving profitability through organic growth. The company has been undertaking significant restructuring initiatives lately, which has led to lower manufacturing costs and improved manufacturing efficiency. Looking forward, the company's fundamentals position it well for improved profitability in the second half of 2014.

Also, Gibraltar Industries undertakes strategic acquisitions in order to expand its businesses and increase its market share. The company acquired a new product line in Sep 2013, for a cash consideration of $5 million. With cash and cash equivalents of approximately $101 million at the end of last reported quarter, Gibraltar Industries is well positioned to enhance its existing product-leadership position through some new acquisitions in future.

In the last reported quarter, Gibraltar Industries' adjusted earnings of 30 cents per share surpassed the Zacks Consensus Estimate of 23 cents by 30.4%. Growing household demand, favorable pricing and volume in a number of product appliances remained the drivers. However, the earnings came slightly down compared with $0.31 earned in the year-ago quarter.,

Despite experiencing several growth prospects in trade, Gibraltar Industries' business remains vulnerable to certain major issues such as delay in project funding by the government, inflating raw material expenses, reduced marginal cost. These issues might adversely affect the company's top-line in the upcoming quarters.

Also, Gibraltar Industries is exposed to customer concentration risks as it derives a large portion of its sales from only a handful of customers. Moreover, uncertainties related to exposure to global platform pose the company to severe operational disruptions.

Taking the overall situation into account, it is impossible to state whether the company would beat the revenues and earnings estimates in the upcoming quarters. With a market capitalization of $492.04 million, Gibraltar Industries currently carries a Zacks Rank #3 (Hold).

Stocks that Warrant a Look

Some better-ranked stocks worth considering within the industry include CaesarStone Sdot-Yam Ltd. CSTE, Graña y Montero SAA GRAM and Headwaters Incorporated HW. All the three companies sport a Zacks Rank #1 (Strong Buy).