PGT Innovations, Inc. stock looks promising at the moment on the back of solid price appreciation which is being fueled by its highly-innovative product offerings, increased advertising and improved demand for impact-resistant products stemming from heightened, post-Irma awareness. We are optimistic about the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

 

Let’s delve deeper and find out what are the factors that make this manufacturer and supplier of residential impact-resistant windows and doors an attractive investment option.

 

 

Solid Rank: PGT Innovations currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

The company also has a Value Growth Momentum Score (VGM Score) of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 or 2, offer the best investment opportunities for investors. Consequently, the company appears to be a compelling investment proposition at the moment.

 

An Outperformer: PGT Innovations’ shares soared 84% in the past year, outperforming the industry’s growth of 14%.

 

 

Strong Q4, Upbeat Guidance: In fourth-quarter 2017, PGT Innovations delivered an 80% year-over-year improvement in earnings to 18 cents per share while net sales grew 22.5% to $134 million. Both beat the Zacks Consensus Estimate.

 

The company has provided net sales guidance range of $550-$575 million, reflecting an increase of 8-13% over the past year. Adjusted EBITDA is likely to lie between $95 million and $105 million, exhibiting an increase of 10-22%. Earnings per share will range between 81 cents and 98 cents. The company had reported adjusted earnings per share of 61 cents in 2017.

 

Positive Earnings Surprise History: PGT Innovations topped the Zacks Consensus Estimate in three of the trailing four quarters, recording an average positive surprise of 7.61%.

 

Positive Estimate Revisions, Growth Projections: Earnings estimates for the company have moved up in the past 30 days, reflecting the optimistic outlook of analysts. The earnings estimate for fiscal 2018 has gone up 18% while that of fiscal 2019 has moved up 20%.

 

The Zacks Consensus Estimate for earnings is 86 cents for fiscal 2018, reflecting year-over-year growth of 41%. For fiscal 2019, the Zacks Consensus Estimate for earnings is pegged at $1.02, year-over-year growth of 20%. The company has long-term expected earnings per share growth of 17.9%, higher than the industry average of 11.8%.

 

Superior Return on Equity (ROE): PGT Innovations’ trailing 12-month ROE supports its growth potential. The company’s ROE of 20.5% is higher than the industry’s average ROE of 8.8%. 

 

Higher Inventory Turnover Ratio: In the trailing 12 months, the inventory turnover ratio for PGT Innovations has been 9.66% compared with the industry’s level of 2.93%. A higher inventory turnover than the industry average means that inventory is sold at a faster rate, suggesting inventory management effectiveness.

 

Growth Drivers in Place: Demand is growing for impact-resistant products stemming from heightened post-Irma awareness. Given the company’s leading market position, highly-innovative products and increased advertising provides it a competitive edge. This will aid in capitalizing on this demand.

 

The company’s current market share in Florida, which is the largest U.S. impact-resistant window and door market, is greater than that of any of its peers. In Florida, continued population expansion, job creation, declining unemployment, growth in the housing market and rational home pricing will fuel growth for the company. 

 

The company will continue to improve its scrap rate performance and operating efficiencies to improve margins. Further, its newer vinyl product lines carry higher margins than previous vinyl products. This will lead to higher margins.

 

 

Some other top-ranked stocks in the industry include United Rentals, Inc. (URI Quick QuoteURI - Free Report) , Patrick Industries, Inc. (PATK Quick QuotePATK - Free Report) and Armstrong World Industries, Inc. (AWI Quick QuoteAWI - Free Report) . While United Rentals sports a Zacks Rank #1, Patrick Industries and Armstrong World Industries carry a Zacks Rank #2.

 

United Rentals has a long-term earnings growth rate of 18.5%. Its shares have gone up 54% in the past year.

 

Patrick Industries has a long-term earnings growth rate of 11.0%. The company’s shares have been up 47% in a year’s time.

 

Armstrong World has a long-term earnings growth rate of 16.8%. The stock has gained 26% in a year’s time.

 

 

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

 

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think.