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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 crafted a 52-week high of $64.95 during intra-day trading, finally closing lower at $63.70 on Jun 8.

The company has a market cap of $3.4 billion. Over the last three months, its average volume of shares traded has been approximately 367K.

Investors are optimistic on this Zacks Rank #2 (Buy) company, backed by Armstrong World’s improved guidance for 2018, strong repair and remodel activity and price increases.

Armstrong World Industries, Inc. Price and Consensus


Armstrong World Industries, Inc. Price and Consensus | Armstrong World Industries, Inc. Quote

Price Performance

Notably, the stock has rallied 46% in a year’s time, higher than the S&P 500’s gain of 14%. Also, Armstrong World has outperformed the 21% growth recorded by the industry during the same time frame.

In addition, 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?

Armstrong World’s shares have been on an uptrend, rallying 16%, since the company reported first-quarter 2018 results in April 2018.

Armstrong World’s raised guidance for the current year also fueled this share-price appreciation. The company raised its EPS guidance to $3.60-$3.82, reflecting year-over-year growth of 19-27%. Its results will be aided by strong repair and remodel activity, as well as the continuation of positive new building construction activity.

Its net sales growth guidance of 5-7% for 2018 will be aided by a modest upturn in volume, average unit value improvement in Mineral Fiber segment and continued double-digit sales gains in the Architectural Specialties segment. The company also expects more than 10% improvement for the year’s EBITDA, driven by sales growth, productivity improvements in plants and restructuring activities.

In first-quarter 2018, Armstrong World implemented a price increase on both Mineral Fiber ceiling tile and grid products. The company also announced a price hike on certain Architectural Specialties products, and two additional price increases on grid products effective from second-quarter 2018. The step will help it combat raw material price inflation.

Notably, Armstrong World’s purchase of Tectum in January 2017 has accelerated its penetration into specialty ceilings and walls. Further, its continued focus on sales leverage and capital investments at Tectum will enable its Architectural Specialty business to expand margins in 2018 and beyond. Moreover, the company’s latest acquisition of the business and assets of Plasterform will boost interior accent capabilities.

Upward Estimate Revisions

Armstrong World’s positive estimate revisions reflect optimism in the company’s potential, as earnings growth is often an indication of robust prospects (and stock price gains). Estimates for the company moved up over the past 60 days, reflecting analysts’ bullish sentiments. The earnings estimate for 2018 has gone up 6%, while that of 2019 climbed 2%.

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

Other Stocks to Consider

Some other top-ranked stocks in the same sector are Installed Building Products, Inc. IBP, Patrick Industries, Inc. PATK and PGT, Inc. PGTI. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Installed Building Products has a long-term earnings growth rate of 30%. The stock has rallied 19% in a year’s time.

Patrick Industries has a long-term earnings growth rate of 12.7%. The company’s shares have gained 25% during the past year.

PGT has a long-term earnings growth rate of 19.3%. Its shares have appreciated 74% over the past year.

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