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Energy costs are climbing again, with diesel prices now crossing 6 dollars a gallon. This is a direct concern for a distributor like Adentra, which moves heavy architectural products across a network of 81 facilities in North America.
When fuel costs rise, it becomes more expensive to ship lumber and decorative surfaces to builders. If the company cannot pass these higher costs on to customers quickly, it will leave less profit on every sale.
Source: WSJ
A key measure of US consumer prices rose more than expected last month, strengthening the case for the Federal Reserve to raise interest rates at its meeting next week. Higher rates generally make it more expensive for people to borrow money for homes or renovations.
Since Adentra depends on a healthy housing market, a move by the central bank to keep rates high for longer could slow down the demand for the building materials the company distributes.
Source: Bloomberg Markets and Finance
Management consistently sets a low bar and clears it, with seven beats in the last eight quarters suggesting they have a firm handle on their costs and operations.
| Expectation | |
|---|---|
| EPS | $0.77 |
| Revenue | $606M |