Gibraltar (ROCK)

Renewable energy and infrastructure solutions provider Gibraltar Industries (NASDAQ:ROCK) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 13.9% year on year to $310.9 million. The company’s full-year revenue guidance of $1.16 billion at the midpoint came in 0.9% below analysts’ estimates. Its non-GAAP profit of $1.14 per share was 5.8% below analysts’ consensus estimates.

Company Overview

Gibraltar (NASDAQ:ROCK) makes renewable energy, agriculture technology and infrastructure products. Its mission statement is to make everyday living more sustainable.

Traditionally, home construction materials companies have built economic moats with expertise in specialized areas, brand recognition, and strong relationships with contractors. More recently, advances to address labor availability and job site productivity have spurred innovation that is driving incremental demand. However, these companies are at the whim of residential construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates. Additionally, the costs of raw materials can be driven by a myriad of worldwide factors and greatly influence the profitability of home construction materials companies.

Other companies operating in the renewable energy, AgTech, and infrastructure markets include Valmont (NYSE:VMI), Lindsay (NYSE:LNN), and SolarEdge (NASDAQ:SEDG).

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Gibraltar’s 2.5% annualized revenue growth over the last five years was sluggish. This was below our standards and is a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Gibraltar’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 7.4% annually.

This quarter, Gibraltar missed Wall Street’s estimates and reported a rather uninspiring 13.9% year-on-year revenue decline, generating $310.9 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 5.4% over the next 12 months. Although this projection implies its newer products and services will catalyze better top-line performance, it is still below average for the sector.

For industrials businesses, cost of sales is usually comprised of the direct labor, raw materials, and supplies needed to offer a product or service. These costs can be impacted by inflation and supply chain dynamics in the short term and a company’s purchasing power and scale over the long term.

Gibraltar has bad unit economics for an industrials company, giving it less room to reinvest and develop new offerings. As you can see below, it averaged a 25.4% gross margin over the last five years. That means Gibraltar paid its suppliers a lot of money ($74.58 for every $100 in revenue) to run its business.

Gibraltar’s gross profit margin came in at 26.6% this quarter, in line with the same quarter last year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Gibraltar has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 11.1%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, Gibraltar’s operating margin rose by 3.5 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q3, Gibraltar generated an operating margin profit margin of 12.8%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Gibraltar’s EPS grew at an unimpressive 7.2% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 2.5% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Gibraltar’s earnings to better understand the drivers of its performance. As we mentioned earlier, Gibraltar’s operating margin was flat this quarter but expanded by 3.5 percentage points over the last five years. On top of that, its share count shrank by 9.4%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Gibraltar, its two-year annual EPS growth of 3.1% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, Gibraltar reported adjusted EPS of $1.14, down from $1.27 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Gibraltar’s full-year EPS of $4.23 to grow 9.5%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Gibraltar has shown impressive cash profitability, enabling it to ride out cyclical downturns more easily while maintaining its investments in new and existing offerings. The company’s free cash flow margin averaged 8.6% over the last five years, better than the broader industrials sector.

Taking a step back, we can see that Gibraltar’s margin expanded by 8.1 percentage points during that time. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability.

Gibraltar’s free cash flow clocked in at $48.53 million in Q3, equivalent to a 15.6% margin. This cash profitability was in line with the comparable period last year and above its five-year average.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Although Gibraltar hasn’t been the highest-quality company lately because of its poor top-line performance, it historically found a few growth initiatives that worked. Its five-year average ROIC was 12.7%, higher than most industrials businesses.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, Gibraltar’s ROIC averaged 1.6 percentage point increases over the last few years. This is a good sign, and we hope the company can keep improving.

One of the best ways to mitigate bankruptcy risk is to hold more cash than debt.

Gibraltar is a profitable, well-capitalized company with $89.4 million of cash and $48.18 million of debt on its balance sheet. This $41.22 million net cash position is 2.1% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We struggled to find many positives in these results. Its revenue missed and its EPS fell short of Wall Street’s estimates. The company also lowered full-year guidance for both revenue and EPS, which is never a positive. Overall, this quarter could have been better. The stock traded down 3.3% to $64.87 immediately following the results.

Updated: December 3, 2025 at 10:28 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Gibraltar.

Gibraltar’s business quality ultimately falls short of our standards. First off, its revenue growth was weak over the last five years. And while its rising cash profitability gives it more optionality, the downside is its gross margins are lower than its industrials peers. On top of that, its projected EPS for the next year is lacking.

Gibraltar’s P/E ratio based on the next 12 months is 11.1x. While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $82 on the company (compared to the current share price of $50.31).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.