Why Eagle Materials' Shares Jumped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of building products maker Eagle Materials (NYSE: EXP  ) rose as much as 11% in the first day of trading after Hurricane Sandy.

So what: The company actually reported slightly disappointing earnings on Monday, just as the storm was hitting. Revenue of $164.7 million was in line with estimates, and adjusted earnings per share of $0.49 were $0.02 ahead of estimates for the fiscal second quarter.

Investors are betting that building product sales will grow as people rebuild after the hurricane, and the company will profit as a result.

Now what: The speculation on winners and losers from Sandy is running rampant in the market today, and this is one case of investors buying because of the storm. Eagle Materials' results may get a bump because of the storm, but it shouldn't fundamentally change the investment thesis on the stock. Shares are still trading at 43 times trailing earnings, which is awfully expensive, even when you consider the company's revenue growth of 22%. I'm selling the pop today, and think there are better values out there, and certainly better ways to play the storm.

Interested in more info on Eagle Materials? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDrawThe Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Related Tickers

10/21/2016 4:02 PM
EXP $77.38 Up +1.18 +1.55%
Eagle Materials CAPS Rating: ****