Gibraltar Industries: Laying the Smackdown

| About: Gibraltar Industries, (ROCK)
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By Jason Raznick

The Rock's laying the smack down on your portfolio.

No, I'm not talking about the former WWE wrestler. I'm talking about Gibraltar Industries, Inc. (NASDAQ:ROCK).

Gibraltar Industries, Inc. manufactures, processes, and distributes residential and commercial building products worldwide. The company's building products include bar grating and safety plank gratings for use in walkways, platforms, safety barriers, drainage covers, and ventilation grates; expanded metal products used in walkways, shelving, barriers, patio furniture, and other applications; perforated metal and metal lath products; fiberglass grating; and ventilation products and accessories.

Earlier in the month, ROCK reported Q2 earnings of 12 cents per share on revenues of $191.8 million. Revenues beat estimates, but earnings missed by a wide margin, as Wall Street expected earnings 18 cents per share.

Shares of Gibraltar have been in a free-fall since the home buyer tax credit expired, falling from a high of $15.40 on May 3, to $7.81 where it currently sits.

Taking a look at the financial statements of Gibraltar, and you start to get a picture of why share prices have been hit so hard recently. The company has a negative return on equity, revenue growth is stagnant at 0.5% growth year over year, and almost as much debt ($208 million ) as market cap ($238 million). Operating margin is anemic at 2.53%.

Any way you look at it this company is a dog, right?

Well, the stock has been oversold to no end, and last week Arthur A Russ Jr. (who is a trustee) bought $39,500 worth of stock on August 23. The stock is dirt cheap right now, trading at only 7 times forward earnings. These bits of information are the only bullish case I can make for the company. There simply isn't much else out there.

Given the fact that the state of the economy is likely to persist around these levels for some time, investors may want to look elsewhere to get a return.

Disclosure: No position in ROCK