Nyse Order Imbalance 173585.0 Shares On Sell Side

Hayward trades at $16.50 per share and has stayed right on track with the overall market, gaining 10.2% over the last six months. At the same time, the S&P 500 has returned 8.2%.

Is there a buying opportunity in Hayward, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.

Why Is Hayward Not Exciting?

We're sitting this one out for now. Here are three reasons why HAYW doesn't excite us and a stock we'd rather own.

1. Slow Organic Growth Suggests Waning Demand In Core Business

Investors interested in Home Construction Materials companies should track organic revenue in addition to reported revenue. This metric gives visibility into Hayward’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.

Over the last two years, Hayward’s organic revenue averaged 5.1% year-on-year growth. This performance was underwhelming and suggests it may need to improve its products, pricing, or go-to-market strategy, which can add an extra layer of complexity to its operations.

2. EPS Trending Down

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Hayward’s full-year EPS dropped 159%, or 26.9% annually, over the last four years. We’ll keep a close eye on the company as diminishing earnings could imply changing secular trends and preferences.

3. New Investments Fail to Bear Fruit as ROIC Declines

ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Hayward’s ROIC averaged 3.1 percentage point decreases over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Final Judgment

Hayward’s business quality ultimately falls short of our standards. That said, the stock currently trades at 20.3× forward P/E (or $16.50 per share). This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're pretty confident there are more exciting stocks to buy at the moment. Let us point you toward one of our all-time favorite software stocks.

As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q3. Today, we are looking at home construction materials stocks, starting with Quanex .

Traditionally, home construction materials companies have built economic moats with expertise in specialized areas, brand recognition, and strong relationships with contractors. More recently, advances to address labor availability and job site productivity have spurred innovation that is driving incremental demand. However, these companies are at the whim of residential construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates. Additionally, the costs of raw materials can be driven by a myriad of worldwide factors and greatly influence the profitability of home construction materials companies.

The 12 home construction materials stocks we track reported a slower Q3. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 0.5% below.

Thankfully, share prices of the companies have been resilient as they are up 7.1% on average since the latest earnings results.

Best Q3: Quanex

Starting in the seamless tube industry, Quanex manufactures building products like window, door, kitchen, and bath cabinet components.

Quanex reported revenues of $489.8 million, flat year on year. This print exceeded analysts’ expectations by 4.4%. Overall, it was an incredible quarter for the company with a beat of analysts’ EPS and EBITDA estimates.

Interestingly, the stock is up 23.2% since reporting and currently trades at $18.58.

Hayward

Credited with introducing the first variable-speed pool pump, Hayward makes residential and commercial pool equipment and accessories.

Hayward reported revenues of $244.3 million, up 7.4% year on year, outperforming analysts’ expectations by 5.5%. The business had a stunning quarter with an impressive beat of analysts’ organic revenue and EBITDA estimates.

Hayward delivered the biggest analyst estimates beat and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 9% since reporting. It currently trades at $16.74.

Slowest Q3: American Woodmark

Starting as a small millwork shop, American Woodmark is a cabinet manufacturing company that helps customers from inspiration to installation.

American Woodmark reported revenues of $394.6 million, down 12.8% year on year, falling short of analysts’ expectations by 2.4%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue estimates and a significant miss of analysts’ adjusted operating income estimates.

Interestingly, the stock is up 22.1% since the results and currently trades at $63.33.

Read our full analysis of American Woodmark’s results here.

Builders FirstSource

Headquartered in Irving, TX, Builders FirstSource is a construction materials manufacturer that offers a variety of lumber and lumber-related building products.

Builders FirstSource reported revenues of $3.94 billion, down 6.9% year on year. This print topped analysts’ expectations by 2.6%. Overall, it was a very strong quarter as it also recorded an impressive beat of analysts’ adjusted operating income estimates and an impressive beat of analysts’ Windows, doors & millworkrevenue estimates.

The stock is up 10.7% since reporting and currently trades at $127.64.

Read our full, actionable report on Builders FirstSource here, it’s free.

Owens Corning

Credited with the discovery of fiberglass, Owens Corning supplies building and construction materials to the United States and international markets.

Owens Corning reported revenues of $2.68 billion, down 2.9% year on year. This number lagged analysts' expectations by 0.5%. Overall, it was a slower quarter as it also recorded revenue guidance for next quarter missing analysts’ expectations significantly and a significant miss of analysts’ adjusted operating income estimates.

The stock is up 1.7% since reporting and currently trades at $124.75.

Read our full, actionable report on Owens Corning here, it’s free.