Gibraltar (ROCK) To Close 5 Facilities, Boost Profitability

Premium construction company, Gibraltar Industries, Inc. (NASDAQ:ROCK) exits its loss-making product lines frequently in order to manage its product portfolio and boost profitability. In sync with the move, the company would close five facilities and release 250 employees over the next 120 days.

Gibraltar Industries’ shares look bullish at the moment. Post third-quarter 2016 earnings release on Oct 27, the Zacks Rank 1# (Strong Buy) stock recorded an average return of 25.97% – outperforming 8.35% returns provided by the Zacks-categorized Building & Construction Products – Miscellaneous industry.

Restructuring for Fostering Growth

Gibraltar Industries recently declared that it would be exiting its small European business (offering solar raking products) and the U.S. bar grading product line, under its ongoing portfolio management program.

The company stated that these product lines have failed to generate profits for a long time, due to adverse market dynamics. Therefore, exiting these lines would likely provide a more focused near-term growth to its business.

Management noted that the move is in sync with its 80/20 strategic initiatives program, designed to deploy resources on the businesses and markets offering maximum returns.

Moving Ahead

Gibraltar Industries estimates that the above-mentioned initiatives would reduce its 2016 revenues by roughly $75 million and improve the operating income by $6 million or 12 cents per share. Also, the company anticipates to accrue post-tax charges of approximately $27 million, outweighed by non-cash write-downs in net asset values. In $27 million, the company projects incurring restructuring charge of $21 million (68 cents per adjusted share) in fourth-quarter 2016 and $6 million (19 cents per adjusted share) in first-quarter 2017; for exiting the product lines.

Other Stocks to Consider

Other favorably placed stocks in the industry are Willdan Group, Inc. (NASDAQ:WLDN) , MasTec, Inc. (NYSE:MTZ) and Comfort Systems USA, Inc. (NYSE:FIX) .

Willdan Group, Inc. has delivered an average positive earnings surprise of 18.72% in the trailing four quarters. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

MasTec, Inc. currently carries a Zacks Rank #2 (Buy). It posted an average positive earnings surprise of 61.27% for the trailing four quarters.

Comfort Systems USA, Inc. currently has a Zacks Rank #2. The company posted an average positive earnings surprise of 15.83% for the trailing four quarters.

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