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Why Beacon Roofing Supply Stock Tumbled 21% Today

By Rich Smith - Updated May 9, 2018 at 12:20PM

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Investors were expecting a loss -- just not a loss this big.

What happened

If you own shares of Beacon Roofing Supply (BECN 2.30%) stock, I have good news and bad news for you. The good news: As of 11:35 a.m. EDT, Beacon Roofing stock is down "only" 11.2%. The bad news: Earlier today, it was down as much as 21.6%, so if you sold there, you sold at the bottom.

So what

What went wrong with Beacon stock? In a word: losses.

Beacon released its fiscal Q2 2018 results after close of trading Tuesday, and the news was not great. The roofing supplies distributor reported $0.35 per share of pro forma losses, when Wall Street had predicted a loss of just $0.09 per share.

Worse, when calculated according to GAAP, Beacon's actual net loss was closer to $1.07 per share -- several times more money than the company lost in last year's Q2. This happened even though Beacon beat sales estimates in the quarter. The company explained the loss by saying earnings were "negatively impacted by winter weather conditions that lowered customer activity, higher operating expenses, increased interest expense, and the impact from preferred dividends."

Nevertheless, it said, quarterly sales jumped 64% to $1.43 billion in fiscal Q2, "positively impacted by strong existing and acquired sales growth within our complementary products category," where sales surged 263%.

Construction worker hammering a roof

Beacon raised the roof on sales in Q2 -- but profits came crashing down. Image source: Getty Images.

Now what

Management did not provide guidance to advise whether it expects its greater sales to result in profits later in the year. For what it's worth, though, analysts who follow Beacon are predicting the company will close out this year with $3.58 per share in profit on sales of $6.74 billion.

Fingers crossed.

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Stocks Mentioned

Beacon Roofing Supply Stock Quote
Beacon Roofing Supply
BECN
$52.54 (2.30%) $1.18

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