Insteel shares fall 7.9% as earnings per share drop to $0.40 despite sales growth
Key Facts
Insteel reported results on October 22 for the fourth quarter and fiscal year ended October 3, 2026, revealing a decline in quarterly earnings despite sales growth. The stock fell 7.9% in afternoon trading on October 23, according to StockStory, which linked the move to earnings per share missing the consensus estimate. Earnings per share were $0.40, 9 cents below an estimate of 49 cents, while revenue beat the $201.31 million estimate, reaching $209.3 million. At the close, the stock was at $27.77 on October 23, compared with $30.30 in the previous session. Quarterly net income fell to $7.7 million from $14.6 million a year earlier, while diluted earnings per share declined to $0.40 from $0.74.
Quarterly sales rose 17.9% to $209.3 million, compared with $177.4 million in the year-earlier quarter. The company said average selling prices increased 6.6%, while shipments rose 10.6%, partly driven by an additional week in the fiscal calendar. Fiscal 2026 spanned 53 weeks, making the fourth quarter 14 weeks compared with 13 weeks in the year-earlier period. On a comparable 13-week basis, shipments increased 2.2% year over year but declined 5.4% from the third quarter, according to Investing.com’s account of the earnings call. The comparison shows that revenue growth benefited from the longer fiscal period and higher prices and shipments, while shipment growth was weaker compared with the prior quarter on a like-for-like basis.
Sales growth did not translate into higher gross profit, which fell to $21.0 million from $28.6 million, while the margin narrowed to 10.0% from 16.1%. The company attributed the decline mainly to higher raw-material costs, along with inflation in shipping and operating costs that outpaced increases in selling prices. The chief executive said domestic wire rod prices remained at historically high levels, above global prices, while availability remained limited. As a result, the company supplemented its domestic purchases with imports. The quarter included $0.7 million in restructuring costs, which the company said reduced earnings per share by $0.03.
For the full fiscal year, sales reached $739.5 million, compared with $647.7 million in the prior year, but net income fell to $29.5 million from $41.0 million. Annual diluted earnings per share declined to $1.51 from $2.10. Annual gross profit also fell to $75.7 million from $93.4 million, and its margin narrowed to 10.2% from 14.4%. In the quarter, operating activities generated $18.2 million in cash, compared with $17.0 million used in the year-earlier period. Working capital provided $4.6 million, after using $37.4 million a year earlier. The company ended the year with no debt and $37.5 million in cash, with no borrowings under its $100.0 million revolving credit facility.
On demand, management said a broader customer base in its engineered construction mesh business helped sustain shipments despite weakness in the wider construction market. It added that government-funded infrastructure activity provides a solid base for the business, and that data-center projects account for most of the activity it sees in private nonresidential construction. The chief executive expects the customer base and shipments in the mesh business to continue growing throughout fiscal 2027. Management also said high domestic wire rod prices and limited supply would remain factors influencing purchasing decisions. It expects elevated input costs and seasonally low demand to continue pressuring margins in the near term.
Insteel plans capital expenditures of about $30.0 million in fiscal 2027 to support expansion of its engineered construction mesh business and investment in prestressed concrete strand operations, along with cost-reduction, productivity-improvement and maintenance initiatives. Management said consolidating welded-wire product operations and closing the Upper Sandusky facility are expected to reduce costs and improve operating efficiency. The company scheduled the results release for October 22 at 6:30 a.m. Eastern Time, followed by an earnings call at 10:00 a.m. that day. In early trading after the announcement, the stock rose 0.25% to $30.47 from a previous close of $30.39, before the decline recorded in afternoon trading the following day. These differing moves between early trading and the subsequent session place the stock’s performance in a separate time context from the annual and quarterly results.