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Could the Eagle Fly Against the Weak Housing?



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Jul 30 2007
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Eagle Materials Inc. (NYSE: EXP, stock) is set to announce its earning today, Monday 30th July 2007, after market close. Eagle Materials Inc. is a manufacturer of basic building materials, including gypsum wallboard, cement, gypsum and non-gypsum paperboard and concrete and aggregates. The CompanyGÇÖs primary businesses are the manufacture and distribution of gypsum wallboard and the manufacture and sale of cement. Gypsum wallboard is distributed throughout the United States with particular emphasis in the geographic markets nearest to its production facilities. It sells cement in four regional markets.

Rating Indicators for EXP:

  • Wall Street consensus : 0.76
  • StockScouter rating : 9 / 10
  • Whisper Number for this stock : 0,78
  • Schaeffer rating for this stock : 7 / 10
  • Power Rating : 6 / 10
  • Insider Trading (last 52 weeks) : ($0.00 M)
  • Zacks Analysts Rating: Hold
  • Option Trading: Oct 2007 45.00 Call
  • Implied Volatility (IV) for Sep 2007 $45.00 Strike : 42.16%

Sales, Income & Growth – For the past 12-months, Eagle Materials registered $922.4 Million in sales versus the industry’s $14,313 Million. Income amounted to $203.00 Million against the industry’s $1,334 Million. While Eagle’s 12-months sales growth is at 7.30% the income growth is 25.90% (the same industry sector sales growth is at 12.00% and income growth of -0.20%).

Profitability & Financial Health – For the past 12-months, net profit margin is in the region of 22.0%. Eagle Materials has a debt/equity ratio of 0.37 compare to industry’s ratio of 0.62.

Stock Resistance & Support Level – The resistance is at 44.88 (200-day moving average) while the first level support is at 31.76 (52-week low)

Risks – The shares are heavily sold by financial institutions.

Eagle Materials ChartThe struggling housing sector has taken its’ toll on the housing stocks such as Beazer Homes, D.R. Horton and Pulte Homes. Related stocks in building suppliers which supply cements such as Eagle Materials is affected as well. But compare to direct home suppliers, cements could be diverted elsewhere. Furthermore the share price of Eagle has consolidated from its peak at $51 per share to current $43.50 per share, nearing its support of $42.00.

Based on its’ track record in beating earning estimate, it could be the most valuable bullet in investing its option or stock. We have not heard much news on the merger of cement players since May when a German cement company said it’s considering to buy over Hanson PLC.





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