Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors. The key to making smart investment decisions with stocks releasing their quarter reports 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.

Let's turn to USG (NYSE:USG). The drywall maker has benefited from recent improvement in the housing industry, but will the good times last? Let's take an early look at what's been happening with USG over the past quarter and what we're likely to see in its quarterly report Wednesday.

Stats on USG

Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$791 million

Change from Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo Finance.

Can USG finally build up its stock?
Analysts have been far less enthusiastic about USG's prospects than shareholders lately, with pros barely budging in their assessment for a quarterly loss for the company. Yet fiscal 2013 is a different matter, with analysts having pushed up earnings-per-share estimates by a nickel over the past three months. That still pales in comparison to the more than 20% gain in the stock since mid-November.

The housing industry is a key component of USG's success in selling its gypsum wall-board and joint compound products. Hovnanian (NYSE:HOV) and Pulte (NYSE:PHM) have both seen huge share-price gains in the past year as demand for housing finally starts to pick up, but with homebuilder stocks having already gotten bid up, smart investors have turned to secondary-effect companies like USG as investment plays.

The big question, though, is whether USG can keep up with the expectations built into its soaring stock price. Even with revenue gearing up to gain at a nearly 10% clip in 2013 and the company seen reversing its losses, a forward P/E above 50 is still very ambitious. By comparison, even rising construction aggregate stocks Martin Marietta Materials (NYSE:MLM) trades at only a 30 forward multiple, although rival Vulcan Materials (NYSE:VMC) has similarly seen its stock price get ahead of its forward earnings estimates.

USG needs to confirm in its quarterly report that things in the housing industry are going as well as everyone seems to think. Any shortfall compared to expectations would likely be devastating for USG shareholders.

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