Eagle Materials stock (NYSE: EXP) lost 10.3% in the last five trading days and currently trades close to $132 per share. EXP, a leading supplier of heavy construction materials and light building materials in the United States, has seen its stock gain almost 30% YTD. The company outperformed the consensus estimates in its first-quarter FY2022 results (FY Apr-Mar). Its revenues increased 11% y-o-y to $476 million driven by growth in all the segments, especially Gypsum Wallboard. Further, its net income of $95 million in the quarter was slightly below the year-ago period. Notably, the prior-year net income includes the gain on the sale of northern California concrete and aggregates businesses. Overall, residential construction and infrastructure spending is likely to remain strong throughout fiscal 2022. In addition to this, the proposed $1 trillion federal infrastructure plan is likely to benefit EXP’s top-line.
But will EXP stock continue its downward trajectory over the coming weeks, or is a rise in the stock more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last ten years, returns for EXP stock average close to 4.8% in the next one-month (21 trading days) period after experiencing a 10.3% drop over the last one week (five trading days) period. Also, there is a 65% chance that the stock will give positive returns over the next one-month period.
But how would these numbers change if you are interested in holding EXP stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test Eagle Materials stock expected return after a rise or drop. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!
MACHINE LEARNING ENGINE – try it yourself:
IF EXP stock moved by -5% over five trading days, THEN over the next 21 trading days, EXP stock moves an average of 3.6 percent with a 58.6% probability of positive returns.
Some Fun Scenarios, FAQs & Making Sense of Eagle Materials Stock Movements:
Question 1: Is the average return for Eagle Materials Stock higher after a drop?
Answer:
Consider two situations,
Case 1: Eagle Materials stock drops by -5% or more in a week
Case 2: Eagle Materials stock rises by 5% or more in a week
Is the expected return for Eagle Materials stock higher over the subsequent month after Case 1 or Case 2?
EXP stock fares better after Case 1, with an expected return of 3.6% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an expected return of 3.3% for Case 2.
In comparison, the S&P 500 has an expected return of 3.1% over the next 21 trading days under Case 1, and an expected return of just 0.5% for Case 2 as detailed in our dashboard that details the expected return for the S&P 500 after a rise or drop.
Try the Trefis machine learning engine above to see for yourself how Eagle Materials stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
Answer:
If you buy and hold Eagle Materials stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For EXP stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
Question 3: What about the average return after a rise if you wait for a while?
Answer:
The expected return after a rise is understandably lower than after a drop as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.
EXP’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
It’s pretty powerful to test the trend for yourself for Eagle Materials stock by changing the inputs in the charts above.
While EXP stock may have moved, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Eagle Materials vs. Regeneron Pharmaceuticals
Trefis
Market Beating Portfolios
Trefis
Price Estimates
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
www.nasdaq.com