October 31, 2012
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.
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