Eagle Materials, Inc. (NYSE:EXP) revealed some insider buying recently in several Form 4 filings with the SEC. On September 19th, Director Lawrence Hirsch purchased 400,000 shares on the open market in a transaction worth over $14 million - a significant amount for an individual. Richard Stewart, another director, revealed yesterday that he had also purchased 1,000 shares in a transaction worth over $35,000. Does this insider buying make sense?

Well, the company is the second largest maker of drywall - the very same industry that caught Warren Buffet's interest (however he's invested in the largest producer, USG Corp.). The stock's recent declines come as a result of the slowdown in residential construction, which accounts for 40-50% of the company's drywall sales; however, the company's commercial demand remains quite strong. Last quarter, the company saw a 27% rise in revenues and a 70% rise in earnings. Finally, the stock is trading at a P/E of just 11x with a PEG ratio of 0.20 and trading significantly below its enterprise value, all of which indicates that the company is severely undervalued.

Although the residential real estate market may not be doing so well right now, this company still benefits from the commercial side of the market and is available on the cheap! This stock is definitely worth keeping an eye on!

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