Why Eagle Materials Has Soared to New Highs

Tomorrow, Eagle Materials (NYSE: EXP  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings 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.

Eagle Materials makes a variety of products used in construction, including cement and concrete, wallboard, and aggregates like crushed stone and sand. With the housing industry starting to recover strongly, Eagle's stock has jumped to levels not seen since the housing boom of the mid-2000s. Let's take an early look at what's been happening with Eagle Materials over the past quarter and what we're likely to see in its quarterly report.

Stats on Eagle Materials

Analyst EPS Estimate

$0.40

Change From Year-Ago EPS

100%

Revenue Estimate

$171.44 million

Change From Year-Ago Revenue

47%

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Can Eagle Materials build up its earnings this quarter?
Analysts have had mixed views about Eagle Materials and its earnings in recent months, reducing their profit estimates for the just-ended quarter by $0.02 per share but adding $0.07 per share to their fiscal 2014 consensus. There's been nothing ambiguous about the stock's performance, though, with shares having risen almost 9% since early February.

The long downturn in the housing industry really hurt Eagle Materials and its peers, as they largely languished for years after the rest of the market turned around and rose sharply. With housing moving in fits and starts, only last year did a real recovery seem to take hold. Investors bid up shares of the entire industry, hoping to beat the rush to invest in long-anticipated growth.

Even now, though, it's far from clear whether the recent rebound has staying power. Earlier this month, peer Vulcan Materials (NYSE: VMC  ) reported 5% lower shipments of aggregates, although rising prices helped offset the impact, and the company noted double-digit-percentage increases in shipments to hot housing areas including Arizona, California, and Florida. Similarly, Cemex (NYSE: CX  ) posted a substantial loss for its March quarter on with 5% lower revenue, but the Mexican company pointed to strength in the U.S. and Asian markets as offsetting weakness in Mexico, Europe, and Latin America.

Still, most companies in the space have high expectations for the future. Martin Marietta Materials (NYSE: MLM  ) said in its first-quarter report that it expects rising shipments for its aggregates, pointing to better housing starts, employment figures in the construction industry, and the need to upgrade highways as justifying greater sales.

In Eagle Materials' quarterly report, watch for the company to give its game plan for how to distinguish itself from its fellow construction-materials peers. Moreover, if it appears that non-residential construction is starting to follow the housing market higher, it could point to another leg up for Eagle Materials' growth.

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