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5 Reasons to Add Beacon Roofing (BECN) to Your Portfolio


Beacon Roofing Supply, Inc. BECN has been performing well of late. Beacon Roofing's pending acquisition of Allied Building Products for $2.625 billion will catapult it to the position of one of the largest public wholesale building materials distributors in North America. The company is also anticipated to benefit from the rebuilding activity triggered by the two back-to-back hurricanes Harvey and Irma.

We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and poised to carry the momentum ahead.

What’s Working in Favor of Beacon Roofing?

Favorable Zacks Rank: Beacon Roofing carries a Zacks Rank #2 (Buy).

Price Performance: The company’s share price has gained 8.4% in the last three months, outperforming the industry’s gain of 6.6%.

Healthy Growth Prospects: The Zacks Consensus Estimate for earnings for fiscal 2017 is pegged at $2.20, depicting year-over-year growth of 4.6%. The estimate for fiscal 2018 of $2.54 reflects year-over-year growth of 16.7%.

The stock has an estimated long-term earnings growth rate of 8.5%.

Positive Earnings Surprise History: Beacon Roofing has outpaced the Zacks Consensus Estimate in two of the trailing four quarters, delivering a positive average earnings surprise of 5.84%.

Growth Drivers: Through the pending Allied Building acquisition, Beacon Roofing would mark its foray in local markets in the New York, New Jersey and Upper Midwest. With projected revenues of roughly $7 billion from the combined company, it will be an increase of 69% in the company's annual revenues from current levels. It will also add about 50-60 cents incremental to earnings per share in the first year. The combined company is anticipated to realize $110 million in run-rate synergies within two years of the closure of the deal.

In addition to growth through acquisitions, the company also remains focused on attaining organic growth. Utilizing technology, the company continues to drive selling effectiveness through its CRM platform and has more than 1000 key employees utilizing this tool. Additionally, the company is in the early stages of its e-commerce rollout, which will enhance customer productivity and sales.

Other Stocks to Consider

Some other top-ranked stocks worth considering in the sector include Lumber Liquidators Holdings, Inc. LL, The Home Depot, Inc. HD and Kirkland's, Inc. KIRK.

Lumber Liquidators Holdings sports a Zacks Rank #1 (Strong Buy) and has an estimated long-term earnings growth of 27.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Home Depot carries a Zacks Rank #2 and has an estimated long-term earnings growth of 13.5%.

Kirkland's flaunts a Zacks Rank #1 and has an estimated long term earnings growth of 15.0%.

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