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Trex Company, Inc. (TREX) Soars to 52-Week High, Time to Cash Out?
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Have you been paying attention to shares of Trex (TREX - Free Report) ? Shares have been on the move with the stock up 21.4% over the past month. The stock hit a new 52-week high of $80.59 in the previous session. Trex has gained 89.3% since the start of the year compared to the 50.6% move for the Zacks Construction sector and the 25.9% return for the Zacks Building Products - Wood industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 30, 2023, Trex reported EPS of $0.57 versus consensus estimate of $0.49.
For the current fiscal year, Trex is expected to post earnings of $1.84 per share on $1.09 billion in revenues. This represents a 2.22% change in EPS on a -1.27% change in revenues. For the next fiscal year, the company is expected to earn $2.18 per share on $1.22 billion in revenues. This represents a year-over-year change of 18.38% and 11.41%, respectively.
Valuation Metrics
Trex may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Trex has a Value Score of C. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 43.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 23.2X. On a trailing cash flow basis, the stock currently trades at 35.9X versus its peer group's average of 8X. Additionally, the stock has a PEG ratio of 3.14. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Trex currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Trex passes the test. Thus, it seems as though Trex shares could still be poised for more gains ahead.
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Trex Company, Inc. (TREX) Soars to 52-Week High, Time to Cash Out?
Have you been paying attention to shares of Trex (TREX - Free Report) ? Shares have been on the move with the stock up 21.4% over the past month. The stock hit a new 52-week high of $80.59 in the previous session. Trex has gained 89.3% since the start of the year compared to the 50.6% move for the Zacks Construction sector and the 25.9% return for the Zacks Building Products - Wood industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 30, 2023, Trex reported EPS of $0.57 versus consensus estimate of $0.49.
For the current fiscal year, Trex is expected to post earnings of $1.84 per share on $1.09 billion in revenues. This represents a 2.22% change in EPS on a -1.27% change in revenues. For the next fiscal year, the company is expected to earn $2.18 per share on $1.22 billion in revenues. This represents a year-over-year change of 18.38% and 11.41%, respectively.
Valuation Metrics
Trex may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Trex has a Value Score of C. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 43.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 23.2X. On a trailing cash flow basis, the stock currently trades at 35.9X versus its peer group's average of 8X. Additionally, the stock has a PEG ratio of 3.14. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Trex currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Trex passes the test. Thus, it seems as though Trex shares could still be poised for more gains ahead.