How to Play Core & Main Ahead of Its Q1 Earnings?

Core & Main CNM will report its fiscal 2024 first-quarter results on Jun 4, before market open.

Let us check out how CNM has lately been doing.

Core & Main, Inc. Price and EPS Surprise

Core & Main, Inc. price-eps-surprise | Core & Main, Inc. Quote

Stock Performance & Valuation

The company's shares have surged 76.4% over the past six months, outperforming the 21.6% rally of the industry it belongs to and the 16.5% rise of the Zacks S&P 500 composite.

Based on EV-to-EBITDA, CNM is currently trading at 19.06X compared with the industry's 12.43X. If we look at the Price/Earnings ratio, CNM shares currently trade at 22.69X forward earnings, below the industry's 26.98X.

FY23 Sales & Margin Performances

CNM's fiscal 2023 revenues amounted to $6.7 billion, a marginal rise on a year-over-year basis. The rise in the top line was driven by geographic expansion, product line expansion and local share gains.

The gross margin of 27.1% increased 20 basis points in fiscal 2023. An operating margin of 11.1% was reported. The strong margin performance was driven by pricing analytics, sourcing optimization, private label and operational excellence.

4Q23 Liquidity

CNM's current ratio (a measure of liquidity) was 2.29 at the end of fiscal 2023 fourth-quarter, lower than the preceding quarter's 2.36 and the year-ago quarter's 3.05. Although it declined, a current ratio of more than 1 often indicates that a company will easily pay off its short-term obligations.

Sales & EPS Estimates

For fiscal 2024 first-quarter, the Zacks Consensus Estimate for revenues is pegged at $1.72 billion, indicating a 9.3% year-over-year rise. The consensus estimate for earnings is pegged at 51 cents per share, suggesting a 2% decline from the year-ago reported figure.

For fiscal 2024, the Zacks Consensus Estimate for CNM's revenues is pegged at $7.54 billion, suggesting 12.6% year-over-year growth. The consensus estimate for earnings stands at $2.59 per share, implying 20.5% year-over-year growth.

To Conclude

CNM trades at a premium relative to its industry based on EV to EBITDA. The company's liquidity position remains healthy but the declining trend is concerning.

Moreover, since the company's shares have gained a whopping 76.4% over the past six months, it may undergo a correction soon.

Also, CNM does not seem poised for an earnings beat. Per our quantitative model, the combination of two key elements — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — increases the odds of a positive earnings surprise. But that is not the case with CNM, as it has an Earnings ESP of 0.00% and a Zacks Rank #3 at present.

Given this backdrop, it may not be a bad idea to wait for this fundamentally strong stock to undergo some correction and offer a better entry point rather than rushing to purchase the stock before earnings.

Earnings Snapshot

Rollins, Inc.'s ROL first-quarter 2024 earnings meet the Zacks Consensus Estimate and revenues beat the same.

ROL's adjusted earnings of 20 cents per share increased 11.1% year over year. Revenues of $748.3 million beat the consensus mark by 2.9% and improved 13.7% year over year. Organic revenues of $702.4 million increased 7.5% year over year.

Booz Allen Hamilton Holding Corp. BAH reported better-than-expected fourth-quarter fiscal 2024 results.

BAH's quarterly adjusted earnings per share of $1.33 surpassed the Zacks Consensus Estimate by 9% and increased 31.7% from the year-ago quarter. The company reported revenues of $2.77 billion, which beat the consensus estimate by 1.8% and increased 13.9% year over year. Revenues, excluding billable expenses, were $1.93 billion, up 13.7% on a year-over-year basis.

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