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Tale of the Tape

Zacks Equity Research

What Makes Armstrong World Industries (AWI) a Strong Sell?
August 01, 2014


Trades from $3
Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

One such stock that you may want to consider dropping is Armstrong World Industries, Inc. (AWI - Free Report) , which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #5 (Strong Sell) further confirms weakness in AWI.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 7 estimates moving down in the past 30 days, compared with no upward revision. This trend has caused the consensus estimate to trend lower, going from $2.64 a share a month ago to its current level of $2.29.

Also, for the current quarter, Armstrong World Industries has seen 5 downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to 93 cents a share from $1.07 over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 14.9% in the past month.

So it may not be a good decision to keep this stock in your portfolio anymore, at least if you don’t have a long time horizon to wait.

If you are still interested in the Building and Construction sector, you may instead consider some better-ranked stocks including Quanex Building Products Corporation (NX - Free Report) and United Rentals, Inc. (URI - Free Report) . Both carry Zacks Rank #2(Buy). Investors interested in the broader Construction sector can consider Boise Cascade Company (BCC - Free Report) with Zacks Rank #2(Buy) and may be better selection at this time.

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