Texas Industries Shares Dropped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of construction materials specialist Texas Industries (NYS: TXI) plunged 10% on Thursday after its quarterly results came in well below Wall Street expectations.

So what: Texas Industries shares jumped last month after the company managed to thwart a hostile takeover bid, but the big second-quarter loss -- $0.75 per share versus the consensus of just a $0.61 loss -- serves as a cold reminder of its still-brutal operating environment. While management has been doing a decent job cutting costs, weak demand in the construction sector continues to weigh heavily on the company's bottom line.

Now what: Don't expect a turnaround anytime soon. "While the general economy is showing signs of some improvement, it has yet to manifest itself in increased construction activity in our markets," CEO Mel Brekhus said. "This is consistent with my expectation of a slow and prolonged recovery in the construction industry." When you couple that rather somber outlook with Texas Industries' huge debt load, the stock is pretty easy to stay away from.

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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score. 

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