Worthington Enterprises Shares Face Pressure Amid Margin Concerns

Worthington Industries US9818111026

Worthington Enterprises posted double-digit revenue growth in its latest quarter, yet investor sentiment turned negative as profitability metrics showed strain. The market's reaction overshadowed a 19% year-over-year sales increase, highlighting concerns over whether a recent major acquisition can improve the outlook for the remainder of the fiscal year.

For its second fiscal quarter of 2026, the company reported revenue of $327.5 million. While this figure surpassed analyst expectations, a closer look at the income statement revealed challenges. The adjusted earnings per share (EPS) saw a modest improvement to $0.65, up from $0.60 in the prior-year period.

However, the gross margin contracted significantly, falling to 25.8% from 27% a year ago. This compression, indicative of rising costs outpacing sales growth, triggered a sharp sell-off. After declining over 3% during the regular trading session, the stock extended its losses in after-hours activity, dropping more than 7% at one point. The company also reported a free cash flow of $39.1 million, a 15% increase.

Shareholder Returns and Strategic Expansion

Despite the margin pressure, Worthington Enterprises maintained its commitment to returning capital to shareholders. The board declared a quarterly cash dividend of $0.19 per share. Shareholders of record on March 13, 2026, will receive the payment on March 27, 2026.

In a strategic move to bolster its construction products segment, the company recently completed the acquisition of the LSI Group. The transaction, valued at approximately $205 million, brings a specialist in commercial metal roofing systems into the fold. Management anticipates this purchase will substantially expand its presence in the commercial construction market and generate operational synergies.

Management's Forward-Looking Stance

Looking ahead to the second half of the fiscal year, company leadership expressed optimism, forecasting stronger seasonal performance. The strategy continues to emphasize a dual approach of organic growth supplemented by strategic acquisitions.

Investors will not have to wait long for an update on progress. Worthington Enterprises is scheduled to release its third-quarter 2026 results on March 23, 2026. This report will be scrutinized for early signs that the integration of LSI Group is beginning to alleviate the margin pressures that dominated the current quarter's narrative.