Quanex Surges After Q4 Adjusted Earnings Top Wall Street Estimates
Shares jumped after a strong quarterly report, driven by the recent Tyman acquisition, even as the company posted a full-year loss on a GAAP basis.
Shares of Quanex Building Products (NYSE: NX) surged in recent trading, climbing approximately 4% to $15.08 after the company reported fourth-quarter adjusted earnings that surpassed analyst expectations. The results offered a dose of optimism for the Houston-based manufacturer, showcasing operational strength and the significant impact of a recent major acquisition.
For the fiscal fourth quarter ending October 31, 2024, Quanex posted adjusted earnings of 83 cents per share, beating the 68-cent consensus estimate that had been anticipated by analysts. Revenue for the quarter was $489.8 million, a figure substantially boosted by the strategic acquisition of Tyman PLC, a key supplier of components to the door and window industry.
However, the upbeat quarterly performance was set against a more challenging full-year picture. For the entire 2024 fiscal year, Quanex reported a net loss of $250.8 million, or $5.43 per share, on total revenue of $1.84 billion. This contrast highlights the transformative, yet complex, impact of the Tyman deal on the company's balance sheet, with the market choosing to focus on the forward-looking operational strength indicated by the adjusted quarterly figures.
In the company's announcement, management credited the strong adjusted earnings to the Tyman contribution and diligent cost management. Quanex noted it achieved margin expansion in its North American Fenestration segment, a sign of effective cost controls and operational efficiency even as the broader housing market navigates the headwinds of elevated interest rates.
"The increase in our adjusted earnings was primarily driven by the contribution from the Tyman acquisition," the company stated in its fourth-quarter earnings release. Management also pointed to the benefits of moderating raw material prices, which helped lower the cost of sales.
The building products sector remains highly sensitive to the health of the construction and remodeling markets, which are directly influenced by borrowing costs and consumer confidence. Quanex's ability to drive profitability through cost discipline and successful integration of a major acquisition appears to be resonating with investors who see value despite the full-year GAAP loss.
Wall Street analysts who cover the stock maintain a positive outlook. The consensus price target sits at $28.00, suggesting a significant potential upside from its current trading level. All two analysts with ratings on the stock currently list it as a 'Buy', indicating confidence in the company's strategic direction and post-acquisition prospects.
Investors will be looking for more detail on the company's strategy and the synergies from the Tyman deal at Quanex's upcoming Investor and Analyst Day, scheduled for February 6, 2025, at the New York Stock Exchange. The company's reported liquidity of $343.3 million as of October 31, 2024, provides a solid foundation as it continues to integrate its new assets and navigate the evolving market landscape.