What Building Product Companies Are Better Positioned During Tariff Turbulence? BofA Securities Weighs In

BofA Securities analyst Rafe Jadrosich writes that the building product companies may encounter significant headwinds from tariffs, though the full impact remains uncertain.

Notably, last week, the Trump administration proposed steep new tariffs on several countries, while maintaining current rates for USMCA-compliant goods from Mexico and Canada.

The analyst writes that this announcement poses risks for plumbing firms such as Fortune Brands Innovations, Inc. FBIN and Masco Corp MAS because they’ve moved production to Southeast Asia and still maintain exposure to China.

Mohawk Industries, Inc. MHK and Whirlpool Corp WHR may be better positioned due to their larger U.S. manufacturing footprint, though they still risk a demand decline in a soft economic environment, adds the analyst.

The analyst estimates an unmitigated 20% hit to EPS for the companies. While pricing could help offset some of the pressure, the broader macroeconomic environment is already tough, adds the analyst.

Jadrosich says that Armstrong World Industries Inc AWI and Owens Corning Inc OC are relatively well-positioned to navigate the potential challenges posed by tariffs.

For Armstrong World Industries, Jadrosich notes shares fell 10% over the past three trading days, though there is an estimate of an EPS impact of under 1% due to its U.S. manufacturing base.

The company has strong pricing power and a focus on ceiling tile replacements to support resilience, adds the analyst.

The analyst says Mohawk Industries’ stock dropped 13%, but is relatively well positioned versus competitors.

Jadrosich writes that luxury vinyl tile (LVT) competitors may need to raise prices by 20%+ to hold margin margins versus Mohawk Industries’ increase of 1%–2%.

For Owens Corning, the analyst writes that the company’s roofing (60% of EBITDA), which is domestically produced and linked to replacement demand, could gain from lower asphalt prices.

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