What happened

Cornerstone Building Brands' (NYSE:CNR) fourth-quarter earnings came in slightly below Wall Street expectations. But the company is expecting big things in 2021, and that helped the stock climb by as much as 11% in Thursday morning trading.

So what

On Wednesday night Cornerstone reported fourth-quarter earnings of $0.01 per share, well below the $0.11-per-share analyst estimate. Revenue, at $1.19 billion, was down 4% year over year but came in about $10 million above what analysts were expecting.

A house under construction.

Image source: Getty Images.

Cornerstone is a supplier of exterior construction materials, and said its results were impacted by lower end-market demand in some segments due to the pandemic. In particular, non-residential demand has been weak in recent quarters, partially offsetting the work the company has done to reduce costs.

"We delivered strong fourth-quarter results, rounding out a year of record performance despite a challenging market environment," CEO James S. Metcalf said in a statement. "The resilience of our business model and strength of our dedicated team helped us deliver on our strategic priorities."

Now what

Cornerstone said it expects "strong" revenue growth in 2021 thanks to demand from single-family housing construction, which should help its windows and siding segments. Commercial should see a rebound, too, assuming pandemic-related construction delays minimize in the months to come.

The company generated $308.4 million in cash from operations in 2020, an improvement of $78.8 million over 2019. If that continues Cornerstone should be able to pay down some of the nearly $3.6 billion in long-term debt on the balance sheet.

Cornerstone is a good company selling into a vibrant market, but the stock is also up more than 300% from its March 2020 pandemic low. There is still potential upside from here, but investors should be warned that given how far it has climbed, a repeat of the last 12 months is unlikely.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.