Armstrong World (AWI) Hits 52-Week High: What's Aiding It?
Armstrong World Industries, Inc. AWI reached a new 52-week high of $99.61 on Dec 26. The stock pulled back to end the trading session at $98.97, down slightly from the previous day’s closing price of $99.05.
The company is notably benefiting from increased sales volume, which is driven by the acquisitions of GC Products, Inc. and BOK Modern, LLC, to some extent, and the company’s efficient execution of its growth initiatives. The uptrend is mirrored through solid contributions from the company’s reportable segments, Mineral Fiber and Architectural Specialties.
Additional factors, including a low inflation rate on certain input costs, lessening impact of supply-chain risks and diminishing labor availability issues, are aiding the growth prospects of Armstrong World.
Let’s delve deeper into the factors that are in favor of AWI’s growth trend.
Factors Driving the Stock’s Growth
Price Performance & Impressive Earnings Growth Trends: This Zacks Rank #2 (Buy) company’s shares increased 36.8% in the past six months, outperforming the Zacks Building Products - Miscellaneous industry’s 23.1% growth, the Zacks Construction sector’s 17.8% increase and S&P 500 Index’s 8.6% rise.
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Armstrong World reported an earnings beat in seven of the trailing 14 quarters, despite the economic downturn and inflationary risks. During the third quarter of 2023, the company’s earnings per share topped the Zacks Consensus Estimate by 23.1% and grew 17.6% on a year-over-year basis. Also, the company delivered a trailing four-quarter earnings surprise of 7.9%, on average.
For 2023 and 2024, earnings estimates showcase growth of 8.2% and 6.8%, respectively, from the previous year.
Earnings estimate for 2024 has moved up to $5.48 per share from $5.47 per share in the past 30 days. Despite the macroeconomic uncertainties, the stock portrays a positive trend, indicating robust fundamentals and elevating the expectation of outperformance in the near term on the back of favorable AUV performance, lower input costs and growing demand patterns.
Accretive Buyouts: Armstrong World intently focuses on a systematic inorganic strategy to enhance its product portfolio. In July 2023, it acquired BOK Modern, LLC, to further enhance its portfolio. The company intends to leverage BOK's third-party network and potentially integrate some operations into existing factories for a more efficient supply chain and improved capacity to support rapid expansion. This strategic buyout contributed to the company’s third-quarter 2023 net sales of about $4 million. Also, the acquisition of GC Products, Inc., in November 2022 simultaneously added $3 million to the quarter’s net sales.
During the third quarter of 2023, the company did not make any notable buyouts but intends to focus on strategic acquisitions, which provide unique attributes and capabilities that leverage business strengths.
Digital Initiatives Bode Well: Armstrong World utilizes several digitalization initiatives and technology enhancements to aid its growth prospects. In third-quarter 2023, sales through Armstrong World’s digital initiative, Canopy, doubled year over year along with positive EBITDA growth. Furthermore, the company is continuously investing in Healthy Spaces and digital initiatives and is optimistic about its contribution to its growth. Strong sales growth in the Health Zone product line through its online marketplace helped the company mitigate some of the negative effects of the overall decline in market activity.
Other Key Picks
Here are some other top-ranked stocks from the same sector.
Fluor Corporation FLR presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
It has a trailing four-quarter earnings surprise of 37.5%, on average. Shares of FLR have increased 14.9% in the past year. The Zacks Consensus Estimate for FLR’s 2023 sales and earnings per share (EPS) indicates an improvement of 12.4% and 197.6%, respectively, from the prior-year levels.
M-tron Industries, Inc. MPTI currently sports a Zacks Rank of 1. MPTI delivered a trailing four-quarter earnings surprise of 35.6%, on average. It has surged 288.2% in the past year.
The Zacks Consensus Estimate for MPTI’s 2023 sales and EPS indicates growth of 30.6% and 156.7%, respectively, from the previous year.
Willdan Group, Inc. WLDN currently sports a Zacks Rank of 1. WLDN delivered a trailing four-quarter earnings surprise of a whopping 850.6%, on average. The stock has gained 24.3% in the past year.
The Zacks Consensus Estimate for WLDN’s 2023 sales and EPS indicates growth of 14.1% and 47.7%, respectively, from a year ago.
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