Why Concrete Pumping Stock Is Declining Today
A weak economy and a wet winter are weighing on the results.
Higher interest rates put pressure on industrial activity and construction, softening demand for concrete. That may explain why stocks Concrete Pumping Holding (BBCP -12.62%)one of the companies responsible for all this concrete, fell 11% at 10:30 a.m. ET on Friday after the company missed its quarterly estimates and lowered its full-year expectations.
Ratios and ratios complicate the workplace
Concrete Pumping earned $0.05 per share for the year to April 30 on $171 million in revenue, compared to $0.10 per share for the year ended April 30 on $111 million in revenue. The operation’s revenue and earnings declined slightly for the year, with concrete waste disposal halted and new construction projects falling.
CEO Bruce Young attributed the decline in concrete pumping to “further delays in rate-sensitive commercial operations and another quarter of above-average rainfall in Texas and the southwestern U.S. markets.”
Commercial projects have been particularly challenged, but this has been partially offset by improvements in residential and infrastructure projects. The company’s infrastructure revenue rose 14% from a year ago, an early sign of funds approved under the Infrastructure Investment and Jobs Act.
Is Concrete pumping out purchases after a weak quarter?
Management doesn’t expect the market to change quickly. Concrete Pumping cut its full-year revenue guidance from $440 million to $460 million and from $440 million to $480 million.
Big construction projects can’t stop and start on a dime, so delays in orders could last until 2025 even if rates ease in the coming months.
In the long term, the need for infrastructure improvements and housing construction will drive robust demand for concrete pumping products. But if nothing else, the quarter highlights that investors should be patient.
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
