PGT Innovations, Inc.
(PGTI - Free Report
) stock looks promising at the moment driven by solid price appreciation due to its highly-innovative product offerings, increased advertising and improved demand for impact-resistant products stemming from heightened, post-Irma awareness. We are optimistic about the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s delve deeper and find out what are the other factors that make this manufacturer and supplier of residential impact-resistant windows and doors an attractive investment option.
What’s Working in Favor of PGT Innovations?
The company also has a Value Growth Momentum Score (VGM Score
) of B. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities for investors. Consequently, the company appears to be a lucrative investment proposition at the moment.
PGT Innovations’ shares soared 77% in the past year, outperforming the industry
’s growth of 20%.
Strong Q1, Upbeat Guidance: In first-quarter 2018, PGT Innovations delivered a year-over-year improvement of 171% in earnings to 19 cents per share while net sales grew 24% to $140 million. Further, the top and bottom lines beat the Zacks Consensus Estimate.
The company now expects 2018 sales to be at the higher end of its prior guidance ranges. The company had earlier provided sales guidance of $550-$575 million, reflecting an increase of 8-13% over the past year. Adjusted EBITDA guidance was previously at $95-$105 million, exhibiting an increase of 10-22%. Earnings per share guidance were at 81-98 cents. The company had reported adjusted earnings per share of 61 cents in 2017.
Positive Earnings Surprise History: PGT Innovations topped the Zacks Consensus Estimate in three of the trailing four quarters, recording an average positive surprise of 14.3%.
Positive Estimate Revisions, Growth Projections: Earnings estimates for the company have moved up in the past 60 days, reflecting the optimistic outlook of analysts. The earnings estimates for fiscal 2018 and fiscal 2019 has gone up 7% and 6%, respectively.
The Zacks Consensus Estimate for earnings is 92 cents for fiscal 2018, reflecting year-over-year growth of 51%. For fiscal 2019, the same is pegged at $1.08, exhibiting year-over-year growth of 17%. The company has long-term expected earnings per share growth of 19.3%, higher than the industry average of 12.4%.
Superior Return on Equity (ROE): PGT Innovations’ trailing 12-month ROE supports its growth potential. The company’s ROE of 22.7% is higher than the industry’s average ROE of 8.1%.
Higher Inventory Turnover Ratio: In the trailing 12 months, the inventory turnover ratio for PGT Innovations has been 9.94% compared with the industry’s level of 2.93%. A higher inventory turnover than the industry average means that inventory is sold at a faster rate, suggesting inventory management effectiveness.
Growth Drivers in Place: Demand is growing for impact-resistant products stemming from heightened post-Irma awareness. The company’s leading market position, highly-innovative products and increased advertising provides it a competitive edge. This will aid it in capitalizing on this demand.
The company’s current market share in Florida, which is the largest U.S. impact-resistant window and door market, is greater than that of any of its peers. It is the third most populous and second fastest-growing state in the United States. In Florida, continued population expansion, job creation, declining unemployment, growth in the housing market and rational home pricing will fuel growth for the company.
PGT Innovations will continue to improve its scrap rate performance and operating efficiencies to enhance margins. Further, its newer vinyl product lines carry higher margins than previous vinyl products. This will lead to higher margins.
Other Stocks to Consider
Some other top-ranked stocks in the industry include Installed Building Products, Inc. (IBP - Free Report
) , Patrick Industries, Inc. (PATK - Free Report
) and Armstrong World Industries, Inc. (AWI - Free Report
) . While Installed Building and Patrick Industries sport the same rank as PGT Industries, Armstrong World carries a Zacks Rank #2 (Buy).
Installed Building Products has a long-term earnings growth rate of 30%. The stock has rallied 21% in a year’s time.
Patrick Industries has a long-term earnings growth rate of 12.7%. The company’s shares have gained 29% during the past year.
Armstrong World has a long-term earnings growth rate of 17.3%. Its shares have appreciated 38% over the past year.
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