Shares of Boral Ltd [ASX:BLD] were up more than 6% today. The share price has rebounded strongly following the slump in late November, when shares were dumped over uncertainty surrounding the acquisition of US building products company Headwaters Incorporated for a sum of US$2.6 billion (AU$3.5 billion).
An acquisition like that creates uncertainty for shareholders, which explains why the share price suffered. It’s taken time for the market to digest that information.
Why is the share price up today?
Shares jumped today on the news of rising profits; half-year net profit was up 12%.
According to Boral’s chief executive Mike Kane, the good profit result is on the back of the East Coast housing boom, with housing starts still well above 200,000 per year.
The company is doing particularly well in apartments and multifamily homes. This sector continues to hold, despite predictions of a crash in apartments. The company is also expecting to benefit from major infrastructure projects in the coming years.
Boral’s US operations continue to grow, posting higher earnings and benefiting from a strong housing market over there.
What now for Boral Ltd?
The company has just received good news with the half-year profit increase. You just have to watch it now and see how the share price reacts to the news. That will tell you the future direction of revenues. Should the share price continue to rise higher after the positive result, it would be a bullish sign for Boral, and may forecast continued good news for the company.
Housing markets in Australia and the US remain strong, and the company may profit further from proposed US infrastructure plans.
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