Stock Building Supply shares rise 10% after strong earnings report

Posted by David Bracken on February 25, 2014 

Jeff Rea, CEO Stock Building Supply

Stock Building Supply shares rose 10 percent Tuesday after the Raleigh company, buoyed by an improving housing market, reported strong fourth-quarter earnings that handily beat Wall Street estimates.

Stock reported net income of $3 million in the quarter, or 11 cents per diluted share, compared with a net loss of $3.8 million, or 36 cents per diluted share, in the fourth quarter of 2012.

The consensus among Wall Street analysts who cover the company was net income of $1.3 million, or 5 cents per share, according to Bloomberg.

Stock’s net sales rose 21 percent to $305.2 million in the fourth quarter. For the year, Stock reported net sales of nearly $1.2 billion, up 27 percent from 2012.

Stock sells windows, doors, roofing and other housing materials in 20 metropolitan areas in 13 states.

Jeff Rea, Stock’s CEO, said in a statement that the company’s revenue growth last year outpaced the 15.5 percent increase in single-family housing starts and “enabled us to expand our operating profit margins and accelerate investments in our business.”

Stock’s net sales to homebuilders increased nearly 31 percent, and net sales to remodeling contractors increased more than 18 percent.

“We anticipate that we can maintain the kind of growth rates in sales ... into 2014,” Rea said Tuesday on a conference call with analysts.

Although the severe weather this winter was expected to dampen housing starts, Rea said the dynamics of the single-family housing market remain the same.

“It’s just a matter of time before the builders can get out ... and get back up to the rates that they anticipate based upon the fundamental demand they see,” he said.

Stock raised $57.4 million in an initial public offering in August, with Stock’s proceeds totaling $46.8 million. The company returned to profitability in the second quarter of 2013 after posting net losses the past two years.

Rea said Stock continues to look for possible acquisitions.

“We’re very interested in the right strategic acquisitions that would either strengthen our current markets and footprint or strategically fit with our longer-term goals,” he said.

Stock shares, which began trading at $14 a share in August, closed Tuesday at $20.80, up $1.93.

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