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Armstrong World Poised for Growth Despite Macro Risks
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We issued an updated research report on Armstrong World Industries, Inc. (AWI - Free Report) on Jun 6, 2016. The company will benefit from opportunities in the American market, focus on new product development and cost-reduction initiatives. However, fluctuations in the price of natural gas, lower commodity prices and softness in commercial markets remain concerns.
This designer and manufacturer of floors, ceilings and cabinets reaffirmed its 2016 guidance with revenue growth of 3–7%. Armstrong World expects low-single-digit growth in the Pacific Rim flooring specific market in 2016.
Armstrong World remains focused on enhancing its products and strengthening customer relationships. The company intends to win over its customers with industry-leading innovative products. Armstrong World launched its new sustained product line recently. These high-performance ceiling solutions meet the most stringent sustainability compliance and transparency standards in the market today.
The company also implemented cost reductions in the fourth quarter of 2015. This helped to offset the impact of market softness in the first quarter of 2016. The company intends to continue with its cost cuts to improve operations and lower costs in these regions.
However, Armstrong World is exposed to fluctuations in natural gas prices. Therefore, the company strives to reduce cost volatility by hedging. As of Mar 31, 2016, the notional amount of these hedges was $3.9 million. The mark-to-market gains or losses on ineffective portions of hedges are recognized in cost of goods sold immediately. We expect these charges to have a negative impact on the company’s bottom line going forward.
Further, Armstrong World experienced softness across commercial markets. Though the healthcare market was the worst hit by reduced customer spending, the education market was also hurt by the same. These trends will affect both the Building Products and Resilient Flooring businesses.
Moreover, the company is exposed to weak international regions. The emerging markets, which have been severely impacted by lower commodity prices, continue to pose challenges for the company.
Armstrong World currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the same sector include Installed Building Products, Inc. (IBP - Free Report) , Simpson Manufacturing Co., Inc. (SSD - Free Report) and TopBuild Corp. (BLD - Free Report) . All of these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Armstrong World Poised for Growth Despite Macro Risks
We issued an updated research report on Armstrong World Industries, Inc. (AWI - Free Report) on Jun 6, 2016. The company will benefit from opportunities in the American market, focus on new product development and cost-reduction initiatives. However, fluctuations in the price of natural gas, lower commodity prices and softness in commercial markets remain concerns.
This designer and manufacturer of floors, ceilings and cabinets reaffirmed its 2016 guidance with revenue growth of 3–7%. Armstrong World expects low-single-digit growth in the Pacific Rim flooring specific market in 2016.
Armstrong World remains focused on enhancing its products and strengthening customer relationships. The company intends to win over its customers with industry-leading innovative products. Armstrong World launched its new sustained product line recently. These high-performance ceiling solutions meet the most stringent sustainability compliance and transparency standards in the market today.
The company also implemented cost reductions in the fourth quarter of 2015. This helped to offset the impact of market softness in the first quarter of 2016. The company intends to continue with its cost cuts to improve operations and lower costs in these regions.
However, Armstrong World is exposed to fluctuations in natural gas prices. Therefore, the company strives to reduce cost volatility by hedging. As of Mar 31, 2016, the notional amount of these hedges was $3.9 million. The mark-to-market gains or losses on ineffective portions of hedges are recognized in cost of goods sold immediately. We expect these charges to have a negative impact on the company’s bottom line going forward.
Further, Armstrong World experienced softness across commercial markets. Though the healthcare market was the worst hit by reduced customer spending, the education market was also hurt by the same. These trends will affect both the Building Products and Resilient Flooring businesses.
Moreover, the company is exposed to weak international regions. The emerging markets, which have been severely impacted by lower commodity prices, continue to pose challenges for the company.
Armstrong World currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the same sector include Installed Building Products, Inc. (IBP - Free Report) , Simpson Manufacturing Co., Inc. (SSD - Free Report) and TopBuild Corp. (BLD - Free Report) . All of these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>