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In determining the new price target, Pettinari applied a 10.5 times next twelve months (NTM) EBITDA multiple, a decrease from the previous 11.5 times, reflecting increased uncertainty in the macroeconomic landscape. InvestingPro analysis reveals the stock is trading at a high PEG ratio relative to near-term earnings growth, suggesting careful valuation consideration is warranted. Despite the lowered target, the analyst’s stance remains Neutral on Eagle Materials (NYSE:EXP) stock. For deeper insights into Eagle Materials’ valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
Pettinari noted that wallboard, a key material in construction, had previously enjoyed a boost from extended construction backlogs, a benefit that is expected to diminish as the backlog normalizes. Despite this, the outlook for cement is more optimistic. The demand for cement showed signs of reacceleration in March and April after facing setbacks due to adverse weather conditions and increased maintenance costs in the fourth quarter. With a strong financial health score of 2.85 (rated "GOOD" by InvestingPro) and annual revenue of $2.26 billion, Eagle Materials appears well-positioned to navigate market fluctuations. Pettinari forecasts a low single-digit percentage growth in cement volumes for fiscal year 2026, benefiting from more favorable comparisons to previous periods.
Eagle Materials has been active in allocating capital, having spent $175 million on acquisitions focused on aggregates and planning to invest $760 million in modernizations at its Laramie, Wyoming cement plant and Duke, Oklahoma wallboard facility. These modernizations are estimated to contribute a combined $120 million to EBITDA, which currently stands at $758.1 million. The company’s strong liquidity position, evidenced by a current ratio of 2.73, and low leverage is expected to provide room for continued share repurchases, following a $298 million buyback in fiscal year 2025.
In determining the new price target, Pettinari applied a 10.5 times next twelve months (NTM) EBITDA multiple, a decrease from the previous 11.5 times, reflecting increased uncertainty in the macroeconomic landscape. InvestingPro analysis reveals the stock is trading at a high PEG ratio relative to near-term earnings growth, suggesting careful valuation consideration is warranted. Despite the lowered target, the analyst’s stance remains Neutral on Eagle Materials stock. For deeper insights into Eagle Materials’ valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Eagle Materials has been the focus of several analyst updates following its fiscal fourth-quarter results. The company reported revenues of $470 million, which fell short of the anticipated $481 million, influenced by underperformance in both cement and wallboard segments. Loop Capital noted that the company’s adjusted EBITDA of $141 million missed expectations, resulting in a price target reduction to $237 while maintaining a Hold rating. Similarly, Stifel adjusted its price target slightly to $241, citing operational difficulties and a cautious stance on the housing market.
DA Davidson also revised its outlook, lowering the price target to $245 and maintaining a Neutral rating, pointing out the company’s significant capital investments aimed at enhancing long-term earnings potential. Meanwhile, Stephens reduced its price target to $255 but kept an Overweight rating, suggesting potential pricing power in both cement and wallboard markets once demand improves. Truist Securities maintained a Buy rating with a $280 target, emphasizing Eagle Materials’ strong margins and potential for earnings growth during favorable market cycles.
Analysts from various firms have highlighted the impact of adverse weather conditions and maintenance costs on Eagle Materials’ recent performance. Despite these challenges, there is optimism about the company’s strategic investments and its position as a low-cost producer with substantial raw material reserves. These developments reflect the dynamic nature of the construction industry and Eagle Materials’ ongoing efforts to navigate market conditions.
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