Here's Why PGT Innovations (PGTI) Stock is Worth a Bet Now
PGT Innovations, Inc.’s PGTI shares have been rallying high, courtesy of its stellar growth in the repair and remodel sector along with solid operating performance across its portfolio.
In fact, shares of this leading U.S. manufacturer and supplier of impact-resistant windows and doors have surged 52.5% over the past year, outperforming the industry’s 2.5% growth.
Notably, earnings estimates for PGT Innovations have exhibited an uptrend, reflecting optimism in the stock’s prospects. The Zacks Consensus Estimate for the company’s 2018 earnings has moved up 15.6%, reflecting six upward revisions over the past 60 days. Also, estimates for 2019 have climbed 16.7% over the same time frame, depicting six positive revisions. This signifies that analysts are optimistic of the company’s future earnings growth, despite much concern surrounding an increase in the price of aluminum, as well as labor and fuel costs.
Let us delve deeper into the other factors that make this Zacks Rank #1 (Strong Buy) stock a profitable pick. You can see the complete list of today’s Zacks #1 Rank stocks here.
What Makes the Stock an Attractive Pick?
Strong Demand for Products: The company has been successfully executing its strategy of investing in advertising and marketing to drive strong sales. It expects to further enhance its value going forward. This is evident from the company’s first half of 2018 results, with net sales increasing 24% courtesy of higher demand for its products, given its deep customer relationships and increased awareness of the benefits of impact-resistant products following last year’s hurricane season.
The company’s gross margin has also benefitted from higher volume, improved operating effectiveness and a favorable mix of sales. During the last reported quarter, gross margin of 33.8% expanded 330 basis points from the year-ago comparable period.
Importantly, PGT Innovations’ bottom line grew considerably by 122.2% year over year to 60 cents per share.
Upbeat Views and Solid Growth Prospects: The company raised its full-year expectations, given its progress achieved so far, higher demand trend and solid free cash flow generation. PGT Innovations expects its net sales ($580-$600 million, increasing 13-17%), adjusted EBITDA ($100-$110 million, up 19-31%), earnings (95 cents to $1.10 per share) and free cash flow ($62-$72 million) to be toward the higher end of the above-mentioned guided range for 2018.
PGT Innovations has solid growth prospects, as is evident from the Zacks Consensus Estimate for its current-year earnings of $1.11 per share, which are expected to grow 82% year over year (higher than the industry average of 29.4%). Meanwhile, the company’s sales are expected to increase by a decent 28.3% in 2018 (versus 4.4% of the industry). Moreover, its earnings are expected to increase 21.8% on 17.7% sales growth in 2019.
Overall, it constitutes a great pick in terms of growth investment, supported by a Growth Score of A.
Western Window Systems Buyout: Last month, PGT Innovations acquired Western Window Systems, positioning the company as a national leader in the premium window and door space while diversifying its geographic footprint, customer base, and higher-margin profile. The transaction is expected to be immediately accretive to its cash EPS, as well as gross and adjusted EBITDA margins. It is also expected to be accretive to GAAP EPS in the first half of 2019.
Notably, Western Window Systems is an Arizona firm that makes glass walls, windows and indoor/outdoor patio door systems.
VGM Score: PGT Innovations has a VGM Score of A. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. In fact, our research shows that stocks with VGM Scores of A or B when combined with a Zacks Rank #1 or 2 (Buy) make a solid investment choice.
Other Stocks to Consider
Other top-ranked stocks in the Construction sector include Comfort Systems USA, Inc. FIX, KBR, Inc. KBR and Jacobs Engineering Group Inc. JEC. While Comfort Systems and KBR sport a Zacks Rank #1, Jacobs carries a Zacks Rank #2.
Comfort Systems’ earnings are expected to increase 56.3% in 2018.
KBR surpassed earnings estimates in three of the trailing four quarters, resulting in an average positive surprise of 12.3%.
Jacobs’ 2018 earnings are expected to increase 35.2%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
PGT, Inc. (PGTI) : Free Stock Analysis Report
Comfort Systems USA, Inc. (FIX) : Free Stock Analysis Report
Jacobs Engineering Group Inc. (JEC) : Free Stock Analysis Report
KBR, Inc. (KBR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
