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Armstrong World (AWI) Hits 52-Week High: What's Driving It?

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Shares of Armstrong World Industries, Inc. (AWI - Free Report) crafted a 52-week high of $72.25 during intra-day trading, finally closing lower at $71.75, on Sep 10.

The company has a market cap of $3.7 billion. Over the past three months, its average volume of shares traded has been approximately 423K.

Also, Armstrong World’s positive estimate revisions reflect optimism in the company’s potential, as earnings growth is often an indication of robust prospects. Estimates for the company moved up over the past 60 days, reflecting analysts’ bullish sentiments. The earnings estimate for 2018 has gone up 0.5%, while that of 2019 climbed 2.6%.

Price Performance

Notably, the stock has rallied 48% in a year’s time, higher than the S&P 500’s gain of 16%. In addition, Armstrong World has outperformed 3% growth recorded by the industry during the same time frame.


 

Investors are optimistic on this Zacks Rank #3 (Hold) company, backed by its focus on restructuring activities, average unit value (AUV) improvement and investment in new products.

Moreover, Armstrong World has an impressive VGM Score of B. In this, V stands for Value, G for Growth and M for Momentum, and the score is a weighted combination of these three scores. Such a score eliminates the negative aspects of stocks and selects winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.

Our research shows that stocks with Style Scores of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3, offer the best investment opportunities.

What Led to the 52-week High?

For 2018, Armstrong World maintained its net sales growth outlook of 5-7%, aided by a modest upturn in volume, AUV improvement in Mineral Fiber segment and continued double-digit sales growth in the Architectural Specialties segment. The company expects adjusted EPS of $3.60-$3.82, reflecting year-over-year growth of 19-27%, for the current year. Its results will also be aided by the company’s strong repair and remodel activity, as well as continuation of positive new building construction activity.

Since its separation from the flooring business in 2016, Armstrong World has been strategically investing in new products, sales and support services, and advanced manufacturing capabilities. In 2017, the company took a major step to fortify the Mineral Fiber category with the launch of Sustain. Further, in the same year, Armstrong World concluded an investment of $100 million to create industry-leading Mineral Fiber manufacturing capabilities, in a bid to support volume and AUV growth.

Additionally, Armstrong World has been implementing higher prices to offset rising costs. The company is expected to maintain its pricing power in ceilings, based on strong distribution network and innovation.

The above-mentioned tailwinds have raised investors’ optimism in the stock and are anticipated to drive the company’s share price in the days ahead.

Stocks to Consider

Some better-ranked stocks in the same space include Continental Building Products, Inc. (CBPX - Free Report) , PGT, Inc. (PGTI - Free Report) and Patrick Industries, Inc. (PATK - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Continental Building Products has a long-term earnings growth rate of 30%. Its shares have been up 58%, over the past year.

PGT has a long-term earnings growth rate of 19.3%. The company’s shares have appreciated 89% in the past year.

Patrick Industries has a long-term earnings growth rate of 14.9%. The stock has gained 36% in a year’s time.

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