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Gibraltar Industries Eyes Growth on Four-Pillar Strategy


We issued an updated research report on premium steel & iron firm Gibraltar Industries, Inc. ROCK on Nov 7.

Over the last month, shares of this Zacks Rank #2 (Buy) stock yielded a return of 5.6%, outperforming 2.5% growth recorded by the industry.

Notably, the attractiveness of this stock as a current investment choice is further accentuated by its favorable VGM Score of A.

Reasons for the Solid Run

Gibraltar Industries has been steadily fortifying its foothold in the market with the successful implementation of its five-year four-pillar value-creation strategy. Under this, the company intends to boost its competency on the back of greater operational efficacy, business acquisitions, strategic portfolio-management moves and stronger innovation.

The company tries to improve its operational efficiency by reducing operational complexity, slashing costs and simplifying product offerings on the back of the 80/20 initiatives. In third-quarter 2017, the company’s adjusted operating margin expanded 170 basis points and adjusted earnings improved 22%, on a year-over year basis.

Gibraltar Industries noted that this upswing stemmed from the reduction in operational complexity, cost adjustment and simplification of product offering (though 80/20 initiatives). Sturdy operational efficacy is anticipated to drive the company’s margins and earnings in the quarters ahead as well.

Gibraltar Industries is also trying to boost the company’s competency on the back of diligent business acquisitions. For instance, the successful integration of Package Concierge Inc. (February 2017) will likely continue to strengthen the company’s Residential business, going forward. On the other hand, the ongoing integration of the Nexus business (October 2016) will drive the performance of the company’s Renewable Energy and Conservation business.

Gibraltar Industries intends to acquire businesses from high-growth end markets, such as postal and parcel solutions, perimeter security and infrastructure, residential building products, and renewable energy and conservation. In sync with its portfolio-management initiative, the company tries to allocate resources and leadership time for these businesses, including higher growth potential. The company exited a European solar-raking business and two major industrial businesses in 2016 under the same initiative. Notably, its innovation investments are also anticipated to boost the company’s top- and bottom-line growth in the near future.

The company also believes robust Residential business, and Renewable Energy and Conservation sales will bolster its revenues. Residential sales are anticipated to improve on the back of steady recovery of the new housing, repair and remodel construction markets, as well as strong sales of the commercial package solutions. On the other hand, the top-line results of the company’s Renewable Energy and Conservation business are projected to improve on the back of a solid domestic business.

Notably, Gibraltar Industries predicts that the damaging impact of the recent tropical storms in the United States (Harvey and Irma) will boost demand for its roofing repair services, going forward.

Other Stocks to Consider

Some other top-ranked stocks in the same space are listed below:

EMCOR Group, Inc. EME currently sports a Zacks Rank of 1 (Strong Buy) and has a positive average earnings surprise of 16.96% for the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Boise Cascade, L.L.C. BCC also flaunts a Zacks Rank of 1 and pulled off an outstanding positive average earnings surprise of 116.28% over the trailing four quarters.

Beazer Homes USA, Inc. BZH holds a Zacks Rank of 2 and generated a remarkable positive average earnings surprise of 103.47% during the same time frame.

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