What happened
Shares of Huttig Building Products Inc (HBP) fell as much as 10.8% in trading Tuesday, after the building-products company reported first-quarter earnings. As of 3:25 p.m. EDT shares were hitting a low for the day and showed no signs of recovery.
So what
Sales were up 11% from a year ago to $175.7 million, due to higher levels of construction across the country and an acquisition. But the company swung from net income of $1.4 million to a loss of $0.9 million, or $0.04 per share, as it invested in an "accelerated growth strategy."
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Results were heavily impacted the acquisition of BenBilt Building Systems, which took place in the second quarter of 2016. Without that, the company's results could have been much worse.
Now what
Investing in growth right now, in the heat of the housing market, doesn't seem like the right timing for Huttig Building Products. This should be when the company is making millions of dollars and expanding margins, so that if demand softens in coming years it won't hurt the company too much. That's what I think investors are seeing today -- and until we see the bottom line improve and grow faster than revenue, this is a housing stock I wouldn't be betting on.