Eagle Materials Beats on EPS but GAAP Results Lag

Eagle Materials (NYS: EXP) reported earnings Feb. 2. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q3), Eagle Materials beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue expanded significantly and GAAP earnings per share contracted significantly.

Gross margins improved, operating margins expanded, net margins shrank.

Revenue details
Eagle Materials notched revenue of $123.6 million. The 11 analysts polled by S&P Capital IQ expected to see net sales of $113.9 million. Sales were 19% higher than the prior-year quarter's $103.9 million.


Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.20. The 14 earnings estimates compiled by S&P Capital IQ predicted $0.13 per share on the same basis. GAAP EPS of $0.07 for Q3 were 42% lower than the prior-year quarter's $0.12 per share.


Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 10.1%, 260 basis points better than the prior-year quarter. Operating margin was 6.6%, 270 basis points better than the prior-year quarter. Net margin was 2.3%, 300 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $111.1 million. On the bottom line, the average EPS estimate is $0.19.

Next year's average estimate for revenue is $488.0 million. The average EPS estimate is $0.58.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 352 members out of 382 rating the stock outperform, and 30 members rating it underperform. Among 148 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 142 give Eagle Materials a green thumbs-up, and six give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Eagle Materials is hold, with an average price target of $24.50.

Over the decades, small-cap stocks, like Eagle Materials have provided market-beating returns, provided they're value priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.

At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. 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 Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.