Fools, meet a company with a terrific track record, superb assets, and quality management. Better yet, it can help scratch your dangerous itch to prematurely throw yourself back into homebuilding investments. It's Eagle Materials
The assets that now belong to Dallas-based Eagle were once part of Centex
With roughly four-fifths of U.S. cement plants owned by overseas producers, Eagle is a rare domestic producer. Its cement operations, which earned it $92.2 million in fiscal 2007 (which ended in March), occur at state-of-the-art plants in Nevada, Illinois, and Wyoming. It's also half-owner of a plant near Austin, Texas. Eagle joins another Dallas-based company, Texas Industries
The gypsum wallboard segment generated operating earnings of $198.1 million last year. The two original wallboard plants are located in New Mexico, and the company has added plants in Colorado and Oklahoma. A fifth plant in South Carolina is just starting up. Obviously, wallboard prices and volumes sold track homebuilding activity closely, directly affecting the company's share price. That largely explains Eagle's recent volatility; the company sports a beta above 3.0.
After topping $70 last year, Eagle's shares have retreated to their current level of just more than $37. The current housing downturn is effectively flattening the company's earnings, with expectations that about $2.45 a share this year will just about be repeated next year.
If that appears to make the company not worth your time, keep this in mind: By purchasing Eagle shares, currently at about a 15.3 forward EPS multiple, you're buying a company that is generating current earnings despite its major ties to homebuilding -- and will benefit materially when housing finally shakes off its current miseries.
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