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Trex Company, Inc. (TREX) Hit a 52 Week High, Can the Run Continue?
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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 13.6% over the past month. The stock hit a new 52-week high of $87 in the previous session. Trex has gained 4.8% since the start of the year compared to the 0.9% move for the Zacks Construction sector and the -2.4% return for the Zacks Building Products - Wood industry.
What's Driving the Outperformance?
The stock has an impressive 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 $2.20 per share on $1.09 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $2.62 per share on $1.22 billion in revenues. This represents a year-over-year change of 19.25% and 11.67%, 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 is due for a pullback from this level.
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. The idea behind the style scores is to help investors 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 B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 39.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 24.7X. On a trailing cash flow basis, the stock currently trades at 38.8X versus its peer group's average of 7.8X. Additionally, the stock has a PEG ratio of 2.62. 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 consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Trex currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
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 fits the bill. Thus, it seems as though Trex shares could have a bit more room to run in the near term.
How Does TREX Stack Up to the Competition?
Shares of TREX have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Boise Cascade, L.L.C. (BCC - Free Report) . BCC has a Zacks Rank of # 1 (Strong Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of D.
Earnings were strong last quarter. Boise Cascade, L.L.C. beat our consensus estimate by 3.17%, and for the current fiscal year, BCC is expected to post earnings of $11.39 per share on revenue of $6.78 billion.
Shares of Boise Cascade, L.L.C. have gained 11.8% over the past month, and currently trade at a forward P/E of 12.19X and a P/CF of 5.7X.
The Building Products - Wood industry is in the top 30% of all the industries we have in our universe, so it looks like there are some nice tailwinds for TREX and BCC, even beyond their own solid fundamental situation.
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Trex Company, Inc. (TREX) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Trex (TREX - Free Report) ? Shares have been on the move with the stock up 13.6% over the past month. The stock hit a new 52-week high of $87 in the previous session. Trex has gained 4.8% since the start of the year compared to the 0.9% move for the Zacks Construction sector and the -2.4% return for the Zacks Building Products - Wood industry.
What's Driving the Outperformance?
The stock has an impressive 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 $2.20 per share on $1.09 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $2.62 per share on $1.22 billion in revenues. This represents a year-over-year change of 19.25% and 11.67%, 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 is due for a pullback from this level.
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. The idea behind the style scores is to help investors 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 B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 39.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 24.7X. On a trailing cash flow basis, the stock currently trades at 38.8X versus its peer group's average of 7.8X. Additionally, the stock has a PEG ratio of 2.62. 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 consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Trex currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
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 fits the bill. Thus, it seems as though Trex shares could have a bit more room to run in the near term.
How Does TREX Stack Up to the Competition?
Shares of TREX have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Boise Cascade, L.L.C. (BCC - Free Report) . BCC has a Zacks Rank of # 1 (Strong Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of D.
Earnings were strong last quarter. Boise Cascade, L.L.C. beat our consensus estimate by 3.17%, and for the current fiscal year, BCC is expected to post earnings of $11.39 per share on revenue of $6.78 billion.
Shares of Boise Cascade, L.L.C. have gained 11.8% over the past month, and currently trade at a forward P/E of 12.19X and a P/CF of 5.7X.
The Building Products - Wood industry is in the top 30% of all the industries we have in our universe, so it looks like there are some nice tailwinds for TREX and BCC, even beyond their own solid fundamental situation.