Zacks Industry Outlook Highlights The Home Depot, Lowe’s Companies, Builders FirstSource, Beacon Roofing Supply and GMS

Zacks Industry Outlook Highlights The Home Depot, Lowe’s Companies, Builders FirstSource, Beacon Roofing Supply and GMS

by Home Decoration

For Immediate Release

Chicago, IL – July 14, 2022 – Today, Zacks Equity Research discusses The Home Depot Inc. HD, Lowe’s Companies Inc. LOW, Builders FirstSource, Inc. BLDR, Beacon Roofing Supply BECN and GMS Inc. GMS.

Industry: Building Products

Link: https://www.zacks.com/commentary/1951601/5-stocks-to-win-in-a-thriving-retail-building-products-industry

The Zacks Building Products – Retail industry is poised to gain from the continued strong consumer demand trends for home renovation and maintenance activities amid rising interest rates and home prices. Rapid urbanization and favorable trends in the housing market are added advantages. The industry players are expected to gain from investments in digital and omni-channel capabilities for meeting demand, executing strategies, and acquisitions.

Continued innovation and e-commerce expansion, and strong demand are likely to benefit industry participants like The Home Depot Inc., Lowe’s Companies Inc., Builders FirstSource, Inc., Beacon Roofing Supply and GMS Inc..

About the Industry

The Zacks Building Products – Retail industry mainly comprises U.S. home improvement retailers, manufacturers of industrial and construction materials, and distributors of wallboard and ceilings systems. Some industry participants offer products and services for home decoration, repair and remodeling, and in-home delivery and installation services.

A few industry players provide construction products, ranging from cement or concrete foundation materials to roofing boards and shingles. The companies also sell lumber, insulation materials, drywall, plumbing fixtures, hard-surface flooring, and lawn and garden decor products. Some players also deal in threaded fastener products, and manufactured and natural stone tiles. In addition to general consumers, the industry players cater to professional builders, sub-contractors, remodelers and retailers.

3 Trends Shaping the Future of Building Products – Retail Industry

Adherence to Home Refurbishing Activities: With rising inflation, interest rates, and increased construction costs and home prices, consumers are inclined toward renovating their homes instead of buying one. Consumers continue to invest in making homes enjoyable and comfortable. Industry experts opine that consumers’ discretionary spending on homes will continue, as interests in keeping houses well-maintained are here to stay.

Revamping interiors to facilitate work-from-home and entertainment needs continues to remain a major trend. Do-it-yourself (DIY) projects for decorating and maintaining furniture and fixtures are being widely undertaken. There is a higher demand for gardening tools, as well as products related to at-home activities such as paint and tool kits. This, along with rapid urbanization, should keep aiding the top-line performances of the industry participants.

Additionally, consumers are open to hiring Professional (Pro) help to complete their home renovations, resulting in rising demand for Pro projects. This is likely to aid companies in the home improvement space, with a focus on building Pro offerings.

Digitization in Focus: Retail Building Products industry participants have been witnessing a surge in online business transactions, owing to consumers’ growing digital dependency. Companies have, therefore, been bolstering their digital presence by expanding the availability of online assortments and bolstering omni-channel capabilities.

Such prudent measures have been aiding the companies to meet the accelerated demand. Companies are also ramping up their delivery operations in order to provide safe and swift services, especially to Pro customers. The digital transaction boom should continue to drive the top line of key industry players.

Rising Costs: Some home improvement retailers have been incurring additional costs to provide enhanced payments and other benefits to employees amid the pandemic. A few players have been witnessing inflationary pressure across product categories, as well as higher transportation costs. Such increased costs are likely to put pressure on margins. Nevertheless, companies are adopting prudent saving measures to cushion the impacts of such costs.

Zacks Industry Rank Indicates Solid Prospects

The Building Products – Retail industry is housed within the broader Zacks Retail-Wholesale sector. The industry currently carries a Zacks Industry Rank #25, which places it in the top 10{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of the Zacks-ranked industries outperforms the bottom 50{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} by a factor of more than 2 to 1.

The industry’s position in the top 50{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group’s earnings growth potential. In the past year, the industry’s earnings estimates for the current fiscal year have increased 20.2{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}.

Given the industry’s encouraging prospects, we present a few stocks that you may want to consider buying for your portfolio. But before that, it is worth taking a look at the industry’s stock-market performance and current valuation.

Industry vs. Broader Market

The Zacks Building Products – Retail industry has outperformed the broader Zacks Retail-Wholesale sector and the Zacks S&P 500 over the past year.

The industry declined 8.3{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} in the past year, whereas the broader sector declined 31.8{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}. Meanwhile, the S&P 500 has registered a fall of 12.3{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} in the past year.

Industry’s Current Valuation

On the basis of forward 12-month price-to-earnings (P/E) ratio, which is the commonly used multiple for valuing Retail-Wholesale stocks, the industry is currently trading at 14.71X compared with the S&P 500’s 16.53X. Further, the sector’s forward-12-month P/E stands at 20.69X.

Over the last five years, the industry traded as high as 23.43X and as low as 14.19X, with the median at 19.54X.

5 Building Products Stocks to Buy

Builders FirstSource: The Dallas, TX-based company manufactures and supplies building materials. The company has been benefiting from its focus on cost synergies, strategic acquisition, and robust demand from solid housing and repair and remodeling activities.

Robust demand for single-family housing, R&R and other activities have been tailwinds for the company’s products and services. Builders FirstSource continues to focus on investing in innovations and enhancing digital solutions for its customers.

Acquisitions are important for Builders FirstSource’s growth strategy to supplement its organic growth and expand extensively across vast geographic boundaries. The Zacks Rank #1 (Strong Buy) company has been active on the acquisition front, which is supporting the top line. It is also focusing on cost-management practices. The stock has surged 49{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} in a year.

The Zacks Consensus Estimate for BLDR’s current fiscal-year sales and earnings indicates growth of 9{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} and 18.8{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, respectively, from the prior-year period’s reported figures. The consensus estimate for the current fiscal-year earnings has moved up 0.2{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} in the past 30 days.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Beacon Roofing: The company is the largest publicly-traded distributor of residential and non-residential roofing materials, along with complementary building products in the United States and Canada. The company has been benefiting from strategic initiatives and the successful execution of its technology initiative in the growing e-commerce platform.

The company is also on track with its Ambition 2025 targets, which emphasize operational excellence, above-market growth trajectory and accelerated stockholder value creation. Beacon has been focusing on business expansion through bolt-on acquisitions, thereby expanding its reach.

Beacon is expanding its digital platform in value-added ways. It remains on track with the long-term target of generating $1 billion in annual digital sales. Disciplined pricing in a volatile, supply-constrained marketplace, and effective and timely sourcing have been aiding margins.

Cost-saving efforts and productivity initiatives are expected to go a long way in bringing down the Zacks Rank #1 company’s operating expenses, thereby driving margins. The stock has risen 3.4{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} in a year. The Zacks Consensus Estimate for BECN’s current fiscal-year sales and earnings indicates growth of 23.5{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} and 36.2{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, respectively. The consensus estimate for current fiscal-year earnings has been unchanged in the past 30 days.

Home Depot: The Atlanta, GA-based company is the world’s largest home improvement specialty retailer, based on net sales. Home Depot has been benefiting from strong demand for home-improvement projects, robust housing market trends and ongoing investments.

Continued strength in both Pro and DIY categories, and digital momentum have been key drivers. Its interconnected retail strategy and underlying technology infrastructure have helped consistently boost web traffic for the past few quarters, aiding digital sales.

Home Depot is witnessing significant benefits from the execution of its One Home Depot plan, which focuses on expanding the supply chain, technology investments and digital enhancements. The Zacks Rank #2 (Buy) company has created the fastest, most efficient delivery network in home improvement through options like buy online pick up in store with convenient pickup lockers, buy online delivery from store with express car and van delivery, and curbside pickup.

The HD stock has declined 10.7{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} in a year. The Zacks Consensus Estimate for its current fiscal-year sales and earnings indicate growth of 3.1{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} and 6.1{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, respectively. The consensus estimate for current fiscal-year earnings has been unchanged in the past 30 days.

Lowe’s Companies: The Mooresville, NC-based leading home improvements retailer has been gaining from strong growth in its Pro business. The company has been enhancing the experience of its pro customers by upgrading pro-focused brands and revamping the pro-service business website.

The company also remains well-positioned to capitalize on the demand for the home improvement market, backed by investments in the technology and merchandise category. Gains from the Total Home strategy and the execution of the Perpetual Productivity Improvement initiative are likely to drive the company’s results in the near and long terms. The Total Home strategy has been resonating well with Pro and DIY customers for a while.

Lowe’s has been progressing well with advancements in the digital channel. The company is investing in enhancing omni-channel retailing capabilities. Management is also committed to enhancing the Pro offerings, expanding the company’s market share and driving the operating margin.

Shares of the Zacks Rank #2 company have declined 6.1{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} in a year. The Zacks Consensus Estimate for its current fiscal year’s sales and earnings indicates growth of 1.7{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} and 12.2{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, respectively. The consensus estimate for current fiscal-year earnings has improved 0.1{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} in the past 30 days.

GMS: The Tucker, GA-based leading North American specialty building product distributor has been gaining from the robust customer service in a solid residential market, coupled with an inflationary pricing environment and successful platform expansion activities. Inflationary pricing, healthy residential end markets, strong performance from complementary products and the recent acquisitions have been sales drivers for GMS.

The Zacks Rank #2 company has risen 1.3{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} in a year. The Zacks Consensus Estimate for GMS’ current fiscal year’s sales and earnings indicates growth of 8.7{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} and 2.8{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, respectively. The consensus estimate for current fiscal-year earnings has moved up 7.1{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} in the past 30 days.

Why Haven’t You Looked at Zacks’ Top Stocks?

Our 5 best-performing strategies have blown away the S&P’s impressive +28.8{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} gain in 2021. Amazingly, they soared +40.3{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, +48.2{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, +67.6{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, +94.4{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, and +95.3{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}. Today you can access their live picks without cost or obligation.

See Stocks Free >>

Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch/

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance  for information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Lowe’s Companies, Inc. (LOW) : Free Stock Analysis Report
 
The Home Depot, Inc. (HD) : Free Stock Analysis Report
 
Beacon Roofing Supply, Inc. (BECN) : Free Stock Analysis Report
 
Builders FirstSource, Inc. (BLDR) : Free Stock Analysis Report
 
GMS Inc. (GMS) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Billionaire’s association with luxury B.C. mansion highlights property tax loophole

Billionaire’s association with luxury B.C. mansion highlights property tax loophole

by Luxury Real Estate

A billionaire’s association with a luxury Vancouver Island mansion highlights land title anomalies that indicate house transfer and international buyers taxes you should not utilize to purchases of some pricey B.C. homes.

CBC disclosed last month that Russian-born billionaire Yuri Milner was the gentleman at the rear of the rely on that purchased the $18 million Mille Fleurs mansion in 2013 — 7 several years right before the oceanfront home would property Prince Harry and Meghan Markle as they reportedly drew up designs to move back again from their royal obligations.

But over and above the intrigue connected with possession of the mansion, the investigation also underscores an unconventional home registration circumstance that predates strata title legislation passed in the 1960s.

In a nutshell, Mille Fleurs is one of a number of attributes positioned on a greater plot of land owned by a corporation regarded as Towner Bay Region Club Ltd., which was integrated in 1929. The even larger plot isn’t subdivided, and the homeowners of the houses positioned in just it are all shareholders of the corporation.

When a property is bought, the unique shares transform arms, but the sale of a single large amount isn’t going to have an effect on the possession of the larger plot, which means there’s no transaction to sign-up with the Land Title Place of work — and as a consequence, no payment of the home transfer or international potential buyers taxes.

‘Wacky entire world of taxation’

There is certainly no suggestion anybody has performed anything wrong — it truly is just the way land title is grandfathered in on selected properties.

A identical problem involving 1960s-era apartment buildings in Vancouver’s West End has found genuine estate brokers trumpet in money letters the fact there’s “NO International Customer TAX and the Residence Obtain TAX” in listings for multi-million-greenback residences struggling with English Bay.

Meghan Markle and Prince Harry in New York in September 2021. At right, the Mille Fleurs mansion in North Saanich, B.C., where the few stayed throughout the winter season of 2020, as they hashed out their approach to move again from formal royal responsibilities. (Roy Rochlin/Getty (still left) Sothebys (right))

“These issues are living in their individual wacky globe of taxation,” claims Ron Usher, basic counsel for the Culture of Notaries Community of B.C.

Usher has catalogued with curiosity what he calls “historic anomalies” like Towner Bay and the West Conclude apartment complexes which — to include a different layer of confusion — are known as co-operatives, but are not the similar type of rental co-ops that exist in B.C. as economical housing.

He states they are possibly very best described as “housing organizations” developed prior to the 1966 Strata Title Act as a way for persons to have shared possession of the setting up in which their flats were being positioned.

Related ownership structures exist in more mature three- and 4-storey buildings scattered all over the Lessen Mainland — normally shocking purchasers when they come across out there is no strata title on their particular person models.

“I assume the crucial position to make — they solved an monumental housing trouble for lots of people just before we had stratas,” Usher suggests.

“These are means in which men and women purchased economical housing. They were trouble-solving schemes as opposed to tax-avoidance techniques.”

‘Not browsing the globe for odd anomalies’

Both equally Usher and Genuine Estate Basis of B.C. professor Tsur Somerville say proudly owning shares in a corporation — as opposed to getting your individual house listed with the Land Title Office — has its disadvantages.

By getting shares, the purchaser buys the ideal to occupy a residence on land owned by a more substantial company that sets the policies for occupancy. It’s tricky to get a property finance loan or any other form of funding.

You are not able to just take benefit of initially time residence potential buyers systems. And then there is cash gains tax if the home is not your principal home.

A picture from a listing for an $8 million apartment in Vancouver’s West Finish. The listing trumpets the reality there is no home transfer tax or overseas consumers tax due to the fact the property is in a ‘co-op’ creating. (REW.ca)

Somerville claims it’s a stretch to visualize tax-averse plutocrats mining the shortcomings of B.C. strata law for approaches to conserve income. 

“The billionaires are working stuff via layers of shell companies with Panamanian legal professionals and shell firms registered in the Cayman Islands,” he reported.

“They’re not hunting the globe for weird anomalies in ownership composition and buying all those.”

According to the province’s property transfer tax calculator, the house tax payable on an $18 million mansion would be $818,000.

Somerville says taken as a complete, the money dropped to provincial coffers by means of land ownership circumstances that predate strata legislation pales in comparison to the measurement of British Columbia’s house marketplace.

But that would not indicate tax avoidance is just not an issue — or that corporate possession of genuine estate is just not currently being applied to escape the two taxes and scrutiny.

‘We’re nervous about putting in rules’

As the previous leader of B.C.’s Inexperienced Bash, Andrew Weaver started conversing about the will need to near the province’s property tax transfer loopholes again in 2014. The concern continue to riles him, two a long time soon after leaving politics.

While in business office, Weaver established his sights on bare trusts — a signifies of separating the name on the title of a piece of authentic estate from the individuals who essentially gain from its possession.

A trustee — often a corporation — retains the legal possession of the house, but all the choices relevant to its use belong to the so-identified as beneficial operator. 

Previous Inexperienced Get together chief Andrew Weaver left politics in 2020, but he continue to feels passionate about the concern of assets transfer tax avoidance. (Mike McArthur/CBC)

Through a sale, the new operator would pay back no matter what the assets prices in addition an further $1 for the shares in the bare trustee company, whose title continues to be on the title — that means there is certainly no want to pay out the house transfer tax.

Weaver suggests B.C. really should adhere to Ontario’s direct by tying the residence transfer tax to a change in helpful ownership, not just title.

“Simple change,” he mentioned.

“It appears to be that we’re fearful about putting in principles. And that is the largest difficulty, is there is almost a risk aversion, it appears to be, to governments placing in procedures.”

‘Committed to strengthening taxation models’

In remedy to questions from CBC about land ownership constructions that consequence in home transfer tax loopholes, B.C.’s Ministry of Finance stated the province is “dedicated to improving taxation models to address challenges like this one particular.”

“A single of the 1st steps in addressing a problem these as this is to assure we have information about useful homeowners, which include data about what they own and the possession buildings they have,” the ministry stated in a statement.

The government points to the new Land Operator Transparency Registry, a publicly searchable databases of any individual with an indirect desire in land. The deadline to file with the 1st-of-its-form-in-Canada database is November 2022.

The ministry suggests it will use the facts “to fully grasp what beneficial possession appears like in B.C., which will support the continued advancement of B.C.’s taxation models.”

As for the 27 plots owned by the Towner Bay Country Club, an unanticipated pitfall offered alone in 2014, when the District of North Saanich pondered no matter if its bylaws would allow for much more than one “visitor cottage” for the total property — which was, following all, not subdivided.

The resolution? Amending the bylaw to take into account those plots the same as land registered with the Land Title Workplace.