Ahead of the Bell: Quanex

An analyst reduced his estimated 2009 earnings loss Friday for Quanex Building Products Corp., seeing some approaching bright spots in the second half of the year for the building components maker.

Analyst Mark L. Parr of KeyBanc Capital Markets lowered his fiscal 2009 estimate to an operating loss of 50 cents per share from a loss of 60 cents per share.

Analysts surveyed by Thomson Reuters expect the Houston company to post a loss of 36 cents per share for the year.

Inventory reductions, gradual improvement in volumes at the Houston company's aluminum segment into the third quarter and other factors could lead to a break-even in the second half, up from a previous outlook of a $17 million loss, he said in a note to investors.

Quanex indicated that demand improved at the end of the second quarter because of the seasonal nature of business, "providing a nascent green shoot" into the third quarter."

Parr maintained his "Hold" rating.

"We have confidence in Quanex's ability to execute, cut costs and generate cash flow," Parr said. "However, the degree of uncertainty in residential construction and residential remodel end markets keeps us on the sidelines until more definitely positive macro fundamentals begin to re-emerge."

Quanex said Thursday that for the three months ended April 30, it lost $40.1 million, or $1.08 per share, compared with a loss of $5.3 million, or 14 cents per share in the year-earlier period. The most recent quarter included an after-tax impairment charge of $29 million, or 78 cents a share.

Analysts surveyed by Thomson Reuters had forecast a loss of 18 cents per share on $118 million in revenue.

David D. Petratis, president and chief executive officer, cited ongoing troubles in the housing market for the losses.

Shares of Quanex closed Thursday at $11.03.