Cement and aggregate maker Texas Industries (NYSE:TXI) recorded a loss in its recently reported first-quarter results, which included a large after-tax charge. Net sales fell, compared to last year's same quarter, showing the still-weak demand for the company's construction products.

IN PICTURES: 6 Hot Careers With Lots Of Jobs

Revenue, Earnings Off
Overall revenue for the quarter was $172 million, compared with $184 million last year's first quarter. Sales were down in all three major segments, cement, aggregate and consumer sales. Costs throughout were up slightly. The company conducts 70% of its cement sales in the Texas market, and cited the still soft construction markets in both Texas and California for weaker sales.

Net income showed a net loss of $23.7 million, or 85 cents a share, with an after-tax charge of $18 million, or 65 cents included. Excluding this charge, the net loss was $5.7 million or 20 cents per share, compared to a profit of $1.7 million, or 6 cents a share in the first quarter a year ago.

Infrastructure Activity Still Weak
With the potential of a $50 billion infrastructure boost in spending on the horizon, this should benefit some of the cement and aggregate manufacturers such as Texas Industries. Also in line for the extra work would be aggregate maker Martin Marietta (NYSE:MLM), Vulcan Materials (NYSE:VMC) and Eagle Industries (NYSE:EXP). While all these companies could benefit, all are not performing equally. Texas Industries has had a rocky couple of years with lots of red ink. Martin Marietta, on the other hand, though it's had its earnings dampened, has still been profitable throughout the terrible construction downturn. (To learn more, see Build Your Portfolio With Infrastructure Investments.)

Past Problems at Texas Industries
One can argue Martin Marietta is more diversified and able to weather the downturn, but there have been concerns from major shareholders in the last few years about the operational problems at Texas Industries, specifically about the wasting of capital resources. Still, Longleaf Partners, a large shareholder in Texas Industries, has added to its stake and so it's reasonable to suggest it sees value there.

Industry Prognosis
With the sluggishness of the economy, the construction industry decline will take some time to reverse. International construction behemoth Cemex (NYSE:CX), for example, after a couple of years of meager profits, has fallen back into the red so far this year. While much of the cement and aggregate infrastructure trade is done regionally, global firms such as Cemex are also feeling the pinch. Indeed, recently Cemex mentioned that the U.S. recovery has been slower than anticipated.

The Bottom LineTexas Industries Stock
If you're bold like Longleaf Partners and you have an exceptionally long time horizon, you might want to investigate Texas Industries as a possible undervalued stock. If you feel the recovery for the construction industry and the cement makers is still a longer ways off, you might want to defer and just monitor things until they actually prove to be better. That means waiting for better sales and earnings.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  2. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  3. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  4. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  5. Stock Analysis

    When Will Dick's Sporting Goods Bounce Back? (DKS)

    Is DKS a bargain here?
  6. Investing News

    How AT&T Evolved into a Mobile Phone Giant

    A third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
  7. Stock Analysis

    Home Depot: Can its Shares Continue Climbing?

    Home Depot has outperformed the market by a wide margin in the last 12 months. Is this sustainable?
  8. Stock Analysis

    Yelp: Can it Regain its Losses in 2016? (YELP)

    Yelp investors have had reason to be happy recently. Will the good spirits last?
  9. Stock Analysis

    Is Walmart's Rally Sustainable? (WMT)

    Walmart is enjoying a short-term rally. Is it sustainable? Is Amazon still a better bet?
  10. Stock Analysis

    GoPro's Stock: Can it Fall Much Further? (GPRO)

    As a company that primarily sells discretionary products, GoPro and its potential falls right in line with consumer trends. Is that good or bad?
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center