USG Corporation (USG), through its subsidiaries, is a manufacturer and distributor of building materials. The company produces a range of products for use in new residential, new non-residential, and residential and non-residential repair and remodel construction, as well as products used in certain industrial processes. The current market price is $16.95 with a one-year analyst price target of $19.14. This represents a 12.92% upside potential, but I feel this stock will see substantially higher gains moving forward into 2013 and 2014.
On 07/25/12, the company announced quarterly earnings of -0.15 per share, a negative surprise of -27.1% below the consensus -0.12. Over the past 4 quarters, the company has reported 2 positive (>2%) and 2 negative surprises. The average surprise for this time period has been 0.8%. With these earnings results, combined with a lack-luster housing market, the price of the stock has plummeted from the $40-$50 range before the housing collapse. Currently, USG's debt-to-capital of 93.6% is the highest within its Construction Materials industry, and its ROE is the lowest within the industry. Despite all of the turmoil and negative publicity USG has maintained its 5-Star S&P rating.
| Index | - | P/E | - | EPS | -2.83 | Insider Own | 1.32% | Shs Outstand | 105.84M | Perf Week | -0.24% |
| Market Cap | 1.79B | Forward P/E | 80.71 | EPS next Y | 0.21 | Insider Trans | 30.93% | Shs Float | 90.30M | Perf Month | -18.51% |
| Income | -299.00M | PEG | - | EPS next Q | -0.08 | Inst Own | 75.46% | Short Float | 25.23% | Perf Quarter | -1.74% |
| Sales | 3.18B | P/S | 0.56 | EPS this Y | 6.88% | Inst Trans | 1.19% | Short Ratio | 6.85 | Perf Half Y | 11.81% |
| Book/sh | 1.11 | P/B | 15.27 | EPS next Y | 124.30% | ROA | -7.87% | Target Price | 19.86 | Perf Year | 72.61% |
| Cash/sh | 4.53 | P/C | 3.75 | EPS next 5Y | 3.00% | ROE | -92.71% | 52W Range | 5.75 - 20.98 | Perf YTD | 66.83% |
| Dividend | - | P/FCF | - | EPS past 5Y | -68.97% | ROI | -9.12% | 52W High | -19.21% | Beta | 2.82 |
| Dividend % | - | Quick Ratio | 1.83 | Sales past 5Y | -12.24% | Gross Margin | 9.91% | 52W Low | 194.78% | ATR | 1.06 |
| Employees | 8780 | Current Ratio | 2.44 | Sales Q/Q | 8.41% | Oper. Margin | -3.18% | RSI (14) | 44.67 | Volatility | 4.85% 5.87% |
| Optionable | Yes | Debt/Eq | 19.59 | EPS Q/Q | 20.52% | Profit Margin | -9.41% | Rel Volume | 1.09 | Prev Close | 16.38 |
| Shortable | Yes | LT Debt/Eq | 19.53 | Earnings | Jul 25 BMO | Payout | - | Avg Volume | 3.33M | Price | 16.95 |
| Recom | 2.80 | SMA20 | -9.08% | SMA50 | -2.75% | SMA200 | 19.17% | Volume | 3,627,625 | Change | 3.48% |
On the flip side, USG has a lot of room for growth and I believe the stock is at a bargain price. USG's average wallboard price of $130 per thousand square feet in 2012's first quarter was 19% above the level in the 2011 quarter. This largely reflected changing market conditions, and USG's decision and capability to offer a full-year wallboard price for its customers at what it called a significantly higher level.
Real estate website Zillow is forecasting that the end may be near, expecting home values nationwide to bottom during the final three months of 2012. As a matter of fact, some believe that the housing market has already started to turn around. USG has idled or permanently closed 3.8 billion square feet of wallboard capacity since mid-2006, its plants operated at only 43% of capacity in 2011. Despite this, USG's net loss is shrinking sharply in this year, currently at $0.10 a share, versus an operating loss of $3.02 a share in 2011.
In addition, Berkshire Hathaway currently holds a 16% stake in the company, which may further reflect anticipation of an increase in stock price. For fiscal year 2013, analysts estimate that USG's earnings per share will grow by 129% to $0.13. I believe while this stock has endured substantial amounts of pressure from the market, it is at the right price to see gains in the future. This is a staple for any long-term portfolio looking for gains.
