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Trex Company, Inc.’s (TREX - Free Report) impressive second-quarter 2017 results, solid future prospects and acquisition initiatives make it a solid bet for investors now.

It currently boasts a Zacks Rank #1 (Strong Buy).

In the last month, the company’s shares have yielded 3.1% return, outperforming 5.9% decline of the industry it belongs to.  


 

Why the Upgrade?

We believe that last month’s share price rally was primarily driven by Trex Company’s impressive second-quarter 2017 financial performance and future growth prospects. Notably, the company’s earnings of 97 cents per share surpassed the Zacks Consensus Estimate by 10.2%. Revenues were up 8% year over year while the company’s gross margin improved 370 basis points.

After delivering impressive results in the first half of the year, Trex Company anticipates benefiting from the ongoing positive momentum in the market in the second half. Also, investments targeted at product innovation, branding, marketing and improving manufacturing processes will prove advantageous. For the third quarter, the company anticipates revenues to be $126 million.

Additionally, Trex Company’s acquisition of Minneapolis-based SC Company is in sync with its inorganic growth initiatives. SC Company is one of the leading companies in the commercial and architectural railing and staging markets. The acquired assets are predicted to generate revenues of $56 million in 2017.

Investors seem to be optimistic about Trex Company’s future prospects, as evident from the positive revisions in earnings estimates for the stock. Over the last 30 days, the Zacks Consensus Estimate for the company increased 3.9% to $2.95 for 2017 and 6.3% to $3.38 for 2018.

Trex Company, Inc. Price and Consensus

 

Trex Company, Inc. Price and Consensus | Trex Company, Inc. Quote

Other Stocks to Consider

Trex Company has a market capitalization of approximately $2.2 billion. Other stocks worth considering in the industry include Potlatch Corporation (PCH - Free Report) , Sterling Construction Company Inc (STRL - Free Report) and U.S. Concrete, Inc. (USCR - Free Report) . While both Potlatch Corporation and Sterling Construction sport a Zacks Rank #1, U.S. Concrete carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Potlatch Corporation’s earnings estimates for 2017 and 2018 were revised upward in the last 60 days. Also, the company delivered an average positive earnings surprise of 41.16% for the last four quarters.

Sterling Construction’s earnings estimates for 2017 improved in the last 60 days. Also, it pulled off an average positive earnings surprise of 47.01% for the last four quarters.

U.S. Concrete’s earnings estimates for 2017 and 2018 improved in the last 60 days. The company delivered better-than-expected results in three of last four quarters, with an average positive earnings surprise of 85.93%.

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