Quanex Building Products Corp. (NX) makes engineering materials and components for the building products markets throughout the world. Its two business segments are Engineered Building Products and Aluminum Sheet Building Products.

The weak housing market has been killing NX’s earnings and thus its stock price. Its second-quarter report was disappointing, mostly due to its spinoff costs and the weak housing market. It earned 17 cents per share, which missed the consensus estimate by over 29%. Revenues also fell 13% from last year.

CEO Raymond A. Jean expressed concern about the continuing woes about the housing market in its conference call. “The combination of a huge inventory overhang of both new and existing home stock, the rise of home foreclosures and a tight credit market is keeping the residential housing market in a depressed state.”

Given that the company’s fortunes are so tied to the housing market, we see further downside for the stock. This year’s earnings estimates have crashed $2.38 per share to 88 cents over the past three months. Its recent earnings miss was its second double-digit disappointment in a row. Additionally, its ROE and net profit margins are below its industry average. We think that the stock will slip below $12 this year.

Suggested Stop: $17.16