Why This Stock May Be Worth Watching?

(RTTNews) - Shares of Quanex Building Products Corp. (NX) touched a new 52-week low of $16.25 yesterday, and currently 33% off a 52-week high of $24.6. Quanex supplies components to Original Equipment Manufacturers (OEMs) in the building products industry. In addition to Kitchen and bath components, it designs and produces energy-efficient fenestration products, Vinyl profiles, insulating glass spacers, window and door screens, and engineered hardwood flooring. The company reported decent second-quarter numbers yesterday after the bell, and reaffirmed full-year revenue guidance. So, the news is not all that bad.

Key takeaways from the latest Q2 report

* Revenues rose to $214.2 million from $209.1 million last year. Consensus - $214.8

*Net income rose to $4.1 million or 12 cents per share from year-ago $1.5 million or 4 cents per share.

*Adjusted Net income rose to $4.8 million or 14 cents per share from year-ago $3.8 million or 11 cents per share. Analysts were modeling 13 cents EPS.

*The company said it implemented price increases at the end of Q2 to combat inflationary pressures and margin contraction. The price increases helped narrow margin contraction vs. Q1 and should offset inflationary costs in the second half, and with continued improvements in operating efficiencies, the company expects to see margin expansion in Q4.

*With the above factors and positive impact from seasonality, the company said it is reaffirming its full year adjusted EBITDA guidance of $103 million to $108 million and revenue guidance of $890 million to $900 million. Analysts foresee $893.8 million in revenues. For 2017, the company reported revenues of $866.6 million and adjusted EBITDA of $99 million.

*The building products maker also said it generated solid free cash flow during Q2, which enabled it to pay down bank debt and improve leverage ratio. As of April 30, 2018, the company's leverage ratio of Net Debt to LTM Adjusted EBITDA improved to 2.2x from 2.3x at October 31, 2017. Quanex reaffirmed its expectations to end fiscal 2018 with this leverage ratio below 2.0x. The net debt to EBITDA ratio determines a company's ability to pay its debt. Generally, a ratio of 4 or higher is considered too high, and says the company is deep in debt. However, this varies depending on the benchmark values of the industry in which the company operates.

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