Why Cornerstone Building Brands Stock Rocketed 28% at the Open on Aug. 12

Shares of construction products company Cornerstone Building Brands (NYSE: CNR) opened sharply higher on Aug. 12, gaining as much as 28% in the first half hour of trading. By 10:30 a.m. EDT the stock had pulled back from the highs, but was still up around 22%. The big news here came out after the close on Aug. 11, when second-quarter earnings were released.

The headline number was definitely impressive, with earnings of $0.21 per share up 50% from the same period of the previous year. That said, revenue, adjusted for acquisitions, was down by nearly 8%, thanks largely to the impact of the COVID-19 pandemic. Cost-cutting allowed the company to improve its adjusted EBITDA margins in all three of its main divisions. But the fly in the ointment is that much of the improvement in earnings was related to a tax gain, so the picture is more complicated than it looks. Net income before the tax item was actually down by nearly 60% year over year. The $0.21 earnings figure appears to be a case of Cornerstone putting its best foot forward.

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Source Fool.com