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Why Boise Cascade's (BCC) Q3 Earnings Are Likely to Decline

Lower commodity pricing and high selling & distribution costs are likely to have hurt Boise Cascade's (BCC) Q3 earnings despite solid demand arising from positive residential construction activity.

This story originally appeared on Zacks

Boise Cascade Company BCC is slated to report third-quarter 2021 results on Nov 2.

In the last reported quarter, the company’s earnings of $7.62 per share topped the Zacks Consensus Estimate by 62.5%. The same rose significantly from the year-ago reported figure of 85 cents per share. The bottom line surpassed the consensus mark in each of the trailing seven quarters.

- Zacks

Trend in Estimates

The Zacks Consensus Estimate for Boise Cascade’s third-quarter earnings has decreased to $2.12 per share from $2.28 over the past 30 days. The estimated figure indicates a 26.4% decline from the year-ago reported figure.

Boise Cascade, L.L.C. Price and EPS Surprise

Boise Cascade, L.L.C. Price and EPS Surprise

Boise Cascade, L.L.C. price-eps-surprise | Boise Cascade, L.L.C. Quote

Factors at Play

Boise Cascade’s third-quarter results are likely to get impacted by the downward commodity pricing trends experienced during the quarter. Being both a manufacturer and a distributor, its performance is highly correlated with residential construction activity, which has been going strong. Despite solid demand, lower commodity wood products pricing might weigh on its results.

As highlighted by the company during the second-quarter earnings call, with the rollout of COVID-19 vaccines and easing of the pandemic restrictions, people are now spending less on home improvement projects, resulting in reduced demand from home center customers. This might have impacted its top line to some extent, in turn resulting in a decline in repair and remodel, and "do-it-yourself" activity from the second quarter.

Also, higher wood fiber costs, and increased selling and distribution expenses are expected to have weighed on its margins. Supply-chain disruptions and tight logistics availability may have added to the woes.

What the Zacks Model Says

Our proven model predicts an earnings beat for Boise Cascade this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our  Earnings ESP Filter.

Boise Cascade has an Earnings ESP of +7.33% and a Zacks Rank #3, currently.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks Worth a Look

Here are some other companies in the Zacks Construction  sector, which according to our model have the right combination of elements to beat on earnings in their respective quarters to be reported.

KBR, Inc. KBR has an Earnings ESP of +2.66% and a Zacks Rank #2 at present.

Jacobs Engineering Group Inc. J has an Earnings ESP of +6.49% and a Zacks Rank #2.

North American Construction Group Ltd. NOA has an Earnings ESP of +0.88% and a Zacks Rank #2 currently.

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