This Building Stock Had Its Best Day in Months. Why Shares Rose.

Quanex Building Products swung to a profit in its fiscal fourth quarter. (Joe Raedle/Getty Images)

Key Points

• Quanex Building Products reported a fiscal fourth-quarter profit of $19.6 million, or 43 cents per share, compared to a loss of $13.9 million last year.
• Shares of Quanex Building Products increased 9.5% to $16.52, marking its largest percentage gain since June.
• The company’s CEO attributed the turnaround to improved liquidity and operational strategies, despite a challenging housing market.

Shares of Quanex Building Products logged their largest same-day percentage increase in months after the small-cap manufacturing company swung to a profit in its fiscal fourth quarter.

Other builder stocks shrugged off the results. The company’s performance appeared more related to business practices than a shift in housing market or macroeconomic prospects.

Quanex, which makes components for windows and doors, logged a fourth-quarter profit of $19.6 million, or 43 cents a share. This compares to a loss of $13.9 million, or 30 cents, in the same period last year.

The turnaround drove shares 9.6% higher to $16.52 on Friday afternoon, Quanex’s biggest percentage increase since June, according to Dow Jones Market Data. Coming into Friday, shares had plunged 38% this year. The benchmark S&P 500, by comparison, had gained over 17%.

In prepared remarks, CEO George Wilson pointed to the company’s improving liquidity, noting that its “strong cash flow” allowed Quanex to repay $75 million in bank debt in fiscal 2025.

“We continue to be encouraged by the overall resilience of the business in the current environment,” Wilson said.

The company in 2025 “executed on a disciplined strategy centered on operational rigor, cost efficiency and long-term value creation,” the CEO said on a call with analysts, noting that Quanex “established new commercial and operational excellence teams to drive improved performance, and we delivered synergy realization above our original $30 million commitment.”

The swing to profitability came with no help from the housing market. Home affordability, inflation, and housing shortages globally were impediments to demand for the company’s products, Wilson noted.

“In the U.S., these factors, combined with a wait-and-see approach ahead of anticipated Federal Reserve rate cuts, have kept many consumers on the sidelines,” Wilson said. “We expect this dynamic to persist into 2026, which we believe could result in a generally flattish demand environment overall.”

The quarterly profit overshadowed weak points in the print as well as prudent messaging from the company. Operating income swelled to $42.9 million from $2.8 million a year earlier. However, sales dipped to $489.8 million from $492.2 million last year.

The CEO had a word of caution heading into fiscal 2026: Wilson warned that revenue and earnings before interest, taxes, depreciation, and amortization could be flat over the prior fiscal year. Quanex declined to provide “official guidance,” saying it plans to revisit its fiscal guidance when it reports first-quarter earnings.

“The first half of 2026 may be more challenged than the first half of 2025, which would imply a somewhat improved second half year-over-year,” the chief executive said.

That could be why the company’s results didn’t boost other builders. The iShares U.S. Home Construction exchange-traded fund, which holds companies related to home builders including Quanex, closed slightly lower on Friday, with the door and window component manufacturer the ETF’s best performer by far.

The explanation for the profit might be a disappointment to investors looking for hope for housing more broadly—but conditions for the industry could improve in 2026. Investors should keep their eyes on the 10-year Treasury yield, which determines the direction for mortgage rates, and eyes peeled for any administrative focus on housing in the months ahead.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com