A Wrench in the Housing Works

 | Oct 09, 2012 | 10:48 AM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

oc

Thanks a lot, Owens Corning (OC). If there could be a worse-timed update of business for one of the keystone names in the housing recovery, I don't know when it would be.

How many ways was it disappointing? First, demand seems to have slacked off for roofing, something that can't be if we are building or fixing up our houses, which is what you do when home pricing gets better and inventory runs short.

Second, the company put through a price increase that hurt business. So margins were very compressed.

Third, manufacturing for the composites business is being transferred to Mexico where the start-up costs were misjudged, while demand slackened.

Fourth, the company took down its global fiberglass demand to 3% from 5% and the company does have a lot of foreign business.

Given that the stocks that have worked so well in this period are housing-related --  like Sherwin Williams (SHW), USG (USG), Stanley Black & Decker (SWK) or Home Depot (HD) and Lowes (LOW) -- this one's tough to swallow.

I would love to explain it away, perhaps as a combination of management misjudgment, weakness in Europe and some terrible execution.

Still, the forecast sticks in my craw. I suspect the whole group takes a breather and tries to regain footing because this firm is too integral to the housing chain to ignore.

Columnist Conversations

Volume in the SPY today was nearly double its 50 day average of volume. (The graph at the bottom of the chart ...
Is this the biotech revolution or the biotech bust? View Small Cap Biotechs Like Never Before: Transparency is...
Market got beat like a rented mule today as equities posted their second worst day of the year. Geopolitical ...
down 302 now, at 16577 the dow 30 is unchanged for 2014. roll the media hype!

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.