Why the core and main stock fell today

Expectations were sky high for Core & Main (CNM -13.72%) entering earnings. Unfortunately, the news didn’t live up to the hype.

Shares of Core & Main traded down 14% at 10:30 a.m. ET after the company missed top and bottom expectations and cut guidance for the full year.

Rainy days dampen growth

Core & Main is a distributor of water products used by municipalities, private water companies and professional contractors. A big part of infrastructure modernization efforts is replacing old water and sewer lines, creating a high demand for the products that Core & Main sources.

The company reported earnings of $0.61 per share in its fiscal second quarter (ended July 28) on sales of $1.96 billion. Although sales rose 5.5% year-over-year and gross profit rose 3.4%, the results fell short of Wall Street’s estimate of $0.74 per share on sales of $2.1 billion .

CEO Steve LeClair said growth was hurt by wet weather conditions that delayed some projects and lower end-market volumes.

The company cut its full-year revenue estimate by $200 million to a range of $7.3 billion to $7.4 billion due to weather disruptions and expectations that some projects that Core & Main had expected to start in 2024 will be pushed to 2025.

Is Core & Main Stock a buy?

Core & Main shares have been a big winner over the past year on expectations of business growth. The stock has given up some of those gains in recent days, but the long-term outlook is still strong.

Timing is uncertain, but Core & Main is a leading distributor selling into markets where demand is expected to grow. The company also continues to consolidate — making five deals since the end of the quarter — which should help expand its addressable market.

Even with the decline, the stock, trading at about 19 times earnings, isn’t cheap. But the market potential is real. Investors with a long-term outlook may want to consider Core & Main shares after the dip.