The Motley Fool Take
USG Hits the Wallboard

Wallboard manufacturer USG's (NYSE: USG) third-quarter figures were terrible, but you might still want to look for an opportunity to snap up some shares.

For the quarter, sales fell 10 percent to $1.3 billion, and net income plummeted 95 percent. USG's struggles were no surprise. New housing starts, which fell to 14-year lows, represent 40 percent of wallboard demand. Meanwhile, homebuilders have gotten creamed. Residential repair and remodeling, which account for 25 percent of wallboard demand, have started to weaken, too.

Only commercial construction, which accounts for about a third of wallboard sales, continues to perform well. In light of the ter- housing market, wallboard pricing sank from $188 per thousand square feet a year ago to $122 currently.

The best thing for USG to do now is to stay disciplined and position itself better for the future. The company is building new, state-of-the-art facilities. This makes a big difference, as newer facilities can often produce wallboard at half the price of older ones.

USG should be patient and wait for the housing market to rebound. It's doing the right things in terms of repositioning and cutting operating expenses. Although it might take several years for the housing market to recover, USG shares should rebound once that happens. ¦