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On Thursday, Citi analyst Anthony Pettinari maintained a Neutral rating on Eagle Materials (NYSE:EXP) shares, with a steady price target of $279.00. According to InvestingPro data, the company, currently valued at $7.86 billion, appears fairly valued based on comprehensive Fair Value analysis. The stock trades at a P/E ratio of 16.8x, with seven analysts recently revising their earnings expectations downward for the upcoming period. Pettinari’s commentary highlighted the impact of wet weather on the company’s operations, noting a 7% year-over-year decline in Cement volumes in the fourth quarter due to unfavorable conditions. This trend has persisted into January and February.
Despite the volume pressure, Eagle Materials has implemented price hikes in the first quarter for both Cement and Wallboard, with Cement prices showing a 4% increase year-over-year in the fourth quarter. The company’s financial position remains robust, with InvestingPro analysis showing strong cash flows that sufficiently cover interest payments and liquid assets exceeding short-term obligations. With last twelve months revenue of $2.27 billion and EBITDA of $771.67 million, the company demonstrates solid operational performance. The company has scheduled Cement price increases ranging from January to April across its markets, with the expectation that price hikes closer to spring may be more successful.
Eagle Materials has also delayed its November 2024 Wallboard price increase to February. The company models a 3% increase in Cement pricing and a 1% rise in Wallboard pricing for the calendar year 2025. Eagle Materials anticipates that Wallboard volumes will remain steady, projecting a 1% year-over-year increase for 2025, despite a slowdown in housing starts.
On the growth front, construction for the Laramie, Wyoming Cement expansion is progressing, and the company has recently acquired Bullskin Stone & Lime for approximately $153 million. This acquisition is expected to contribute an estimated $12-13 million in EBITDA and may have a potential 12-13x EBITDA purchase multiple. The Aggregates operations from this acquisition are set to support Eagle Materials’ significant Cement terminal in Pittsburgh, which is serviced from its Kentucky plant.
Lastly, Pettinari mentioned that the Infrastructure Investment and Jobs Act (IIJA) remains intact despite recent political volatility. Eagle Materials maintains a strong financial health score of "GOOD" according to InvestingPro analysis, supported by its 22-year track record of consistent dividend payments and robust return on assets of 16%. For deeper insights into Eagle Materials’ financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, offering detailed analysis of this and 1,400+ other US stocks. Eagle Materials has not experienced any delays in infrastructure projects related to executive orders and does not anticipate any interruptions to IIJA projects that the company is involved with.
In other recent news, Eagle Materials Inc . reported its Q3 FY2025 earnings, missing both EPS and revenue expectations. The company’s EPS was $3.56, falling short of the forecasted $3.96, and revenue came in at $558 million, below the anticipated $578.32 million. Despite these challenges, the company completed strategic investments, including a water treatment facility and an acquisition in Pennsylvania. Eagle Materials also secured a new $300 million term loan, enhancing its financial flexibility. This new credit agreement refinances an existing $200 million term loan and revamps its revolving credit facility. The company now has a $750 million revolving credit facility and an uncommitted incremental facility of up to $375 million for general corporate purposes. Analysts have noted that Eagle Materials has maintained a strong competitive position despite the earnings miss, with strategic investments and a low incident rate in operations. The company remains optimistic about future construction activity and infrastructure spending.
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