Texas Industries Earnings: An Early Look

Earnings season is just about over, with almost all companies already having reported their quarterly results. But there are still a few companies left to report, and Texas Industries (NYSE: TXI  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

For years, the construction industry languished in a slow economic recovery, and Texas Industries had difficulty in its cement and construction-aggregates business. But over the past year, the recovery has finally taken hold in full force, and companies across the industry have taken flight. Let's take an early look at what's been happening with Texas Industries over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on Texas Industries

Analyst EPS Estimate

($0.41)

Year-Ago EPS

($0.87)

Revenue Estimate

$141 million

Change From Year-Ago Revenue

4.7%

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Will Texas Industries build up its stock price this quarter?
In recent months, analysts have gotten less pessimistic about prospects for Texas Industries. They've narrowed their loss estimates for the just-ended quarter by more than a dime per share, and they've been even more enthusiastic about the company's fiscal 2014 results, as they're now coming a lot closer to seeing Texas Industries break even. The stock has been on fire, rising nearly 30% just since mid-December.

Throughout the construction business, hope about the recent upturn in housing construction has led to renewed interest in Texas Industries and its peers. Late last year, Martin Marietta Materials (NYSE: MLM  ) started seeing a big upsurge in revenue as new-home starts and permits for new residential construction jumped to multiyear highs, and activity levels have only increased since then. By itself, housing won't boost demand enough to justify big share-price moves, but historically, non-residential construction has followed on the heels of new home-building, and Vulcan Materials (NYSE: VMC  ) and Texas Industries have both seen investors anticipate an expected upturn across the non-residential industry.

But Texas Industries still faces some challenges. Unlike Martin Marietta, Texas Industries hasn't managed to become consistently profitable. Until expected increases in orders actually materialize, it's hard to take the company's share-price advance as anything but premature.

Still, at least one insider is excited about Texas Industries. Bernard Lanigan, who serves on the company's board of directors, has regularly bought shares over the past six months, most recently investing more than $500,000 in early February.

In its quarterly report, watch Texas Industries closely to see if it's able to avoid the revenue drop in aggregates that Vulcan suffered during its most recent quarter. Guidance will likely be positive, but you'll want to be sure that it's realistic before jumping on the bandwagon even if earnings beat expectations.

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