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Armstrong World Stock Trading at a Premium to Industry: Should You Buy?
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Armstrong World Industries, Inc.’s (AWI - Free Report) shares are currently trading at a premium to its Zacks Building Products - Miscellaneous industry, with its forward 12-month price-to-earnings (P/E) ratio at 23.93X. The industry is currently trading at 19X. Its Value Score of D suggests that the stock is not so cheap and indicates a stretched valuation at this moment.
The company is also trading currently at a discount compared to similar players like Trex Company, Inc. (TREX - Free Report) and The AZEK Company Inc. (AZEK - Free Report) but premium to Simpson Manufacturing (SSD - Free Report) . TREX, AZEK and SSD are trading with forward 12-month P/E multiples of 34.34, 35.85 and 22.6, respectively.
While premium valuations can signal investor confidence in a company's growth potential, they also warrant scrutiny. Is AWI a buy despite its elevated valuation?
Armstrong World Stock Trading at a Premium
Image Source: Zacks Investment Research
Is Armstrong World’s premium valuation justified at this present moment? Let’s have a look at its share price performance, earnings estimates movement and fundamental factors that can impact its valuation.
Shares of this leading global producer of ceiling systems soared 29.6% in the past three months, outperforming the industry’s 12.4% growth. The stock even fared better than the broader Construction sector’s 10.2% rise and the S&P 500’s 7.1% increase.
After hovering around $162.00 per share for the past three trading sessions, the stock reached a new 52-week high of $164.40 on Monday. It then pulled back slightly to close the trading session at $162.01 yesterday, marking a 1.5% discount from the peak.
AWI Stock’s 3-Month Price Performance
Image Source: Zacks Investment Research
The company has capitalized on rising sales of cutting-edge digital platforms like ProjectWorks and Canopy, along with moderated input costs, strategic acquisitions of 3form and BOK Modern, and significant federally funded transportation projects. By prioritizing innovation — especially in energy-efficient and digital solutions — the company is well-positioned for sustained growth, even in the face of broader market uncertainties.
Technical indicators show that AWI stock is currently trading above the 50-day SMA and 200-day SMA, and the 50-day SMA continues to read higher than the 200-day moving average, indicating a bullish trend.
FIX Stock Trades Above 50-Day SMA & 200-Day SMA
Image Source: Zacks Investment Research
What’s Driving the AWI’s Premium Valuation?
Rising Demand for Decarbonization Solutions Bodes Well for AWI
The push for energy efficiency and decarbonization is creating new opportunities for AWI. The company’s innovative TEMPLOK ceiling products, incorporating phase-change materials and mineral fiber tiles, help regulate building temperatures and reduce energy costs by up to 15%, making them an appealing choice for building owners.
AWI also introduced Low Embodied Carbon (LEC) products, including the Ultima LEC ceiling tiles, which feature the lowest embodied carbon among their peers. These offerings align with industry trends toward sustainability and compliance with standards like the proposed LEED v5 guidelines, which emphasize decarbonization.
The company’s efforts are further supported by initiatives such as the U.S. Department of Energy's Green Proving Ground program, where TEMPLOK is being tested, highlighting AWI’s positioning as a leader in energy-efficient solutions.
Armstrong World’s Innovation and Digital Platforms
Armstrong World is leveraging its ProjectWorks and Canopy platforms to drive growth. These platforms help AWI stand out in the market by enhancing customer engagement and boosting sales volumes and average unit values.
Armstrong World’s Acquisitions Driving Growth
AWI continues to execute its inorganic growth strategy, acquiring nine companies over the past seven years to strengthen its Architectural Specialties segment. In April 2024, AWI acquired 3form, LLC, a designer and manufacturer of architectural resin and glass products for walls, partitions, and ceilings, based in Salt Lake City, UT, with three U.S. production and design facilities.
Earlier in January 2024, AWI formed a strategic partnership with McKinstry by investing in Overcast Innovations, a McKinstry venture specializing in modular designs that enhance air quality, lighting, acoustics, and energy efficiency. This collaboration combines AWI’s expertise in ceiling systems with Overcast’s innovative modular approach.
Integration efforts for 3form and BOK Modern are progressing well, with both acquisitions contributing to growth.
Armstrong World’s Earnings Estimates are Going Up
The Zacks Consensus Estimate for Armstrong World’s 2024 and 2025 earnings per share has moved up 1.8% and 1.9%, respectively, in the past 30 days. The estimated figures for 2024 and 2025 indicate 16.2% and 10.6% year-over-year growth.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Image Source: Zacks Investment Research
How Should Investors Play the AWI Stock?
Armstrong World has been delivering strong financial performance and strategic growth, making it an attractive investment opportunity. Positive trends in EPS estimate revisions highlight growing analyst optimism about the company's earnings potential, which often aligns with stock price increases. Furthermore, management has raised its full-year 2024 guidance, projecting revenue growth of 10%-11% and an adjusted EBITDA increase of 12%-14%. These upward revisions reflect confidence in the company’s growth strategy and competitive positioning. While AWI trades at a premium relative to industry peers, its consistent outperformance and robust growth prospects justify the valuation.
Despite challenges in the renovation markets, Armstrong World has leveraged its digital platforms, acquisitions, and innovative products to adapt effectively. Federally funded transportation projects and energy-efficient solutions, such as TEMPLOK energy-saving ceilings, are expected to drive sustained growth through 2025 and beyond. With a Zacks Rank #2 (Buy), the company appears well-positioned for continued success. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Armstrong World Stock Trading at a Premium to Industry: Should You Buy?
Armstrong World Industries, Inc.’s (AWI - Free Report) shares are currently trading at a premium to its Zacks Building Products - Miscellaneous industry, with its forward 12-month price-to-earnings (P/E) ratio at 23.93X. The industry is currently trading at 19X. Its Value Score of D suggests that the stock is not so cheap and indicates a stretched valuation at this moment.
The company is also trading currently at a discount compared to similar players like Trex Company, Inc. (TREX - Free Report) and The AZEK Company Inc. (AZEK - Free Report) but premium to Simpson Manufacturing (SSD - Free Report) . TREX, AZEK and SSD are trading with forward 12-month P/E multiples of 34.34, 35.85 and 22.6, respectively.
While premium valuations can signal investor confidence in a company's growth potential, they also warrant scrutiny. Is AWI a buy despite its elevated valuation?
Armstrong World Stock Trading at a Premium
Image Source: Zacks Investment Research
Is Armstrong World’s premium valuation justified at this present moment? Let’s have a look at its share price performance, earnings estimates movement and fundamental factors that can impact its valuation.
Shares of this leading global producer of ceiling systems soared 29.6% in the past three months, outperforming the industry’s 12.4% growth. The stock even fared better than the broader Construction sector’s 10.2% rise and the S&P 500’s 7.1% increase.
After hovering around $162.00 per share for the past three trading sessions, the stock reached a new 52-week high of $164.40 on Monday. It then pulled back slightly to close the trading session at $162.01 yesterday, marking a 1.5% discount from the peak.
AWI Stock’s 3-Month Price Performance
Image Source: Zacks Investment Research
The company has capitalized on rising sales of cutting-edge digital platforms like ProjectWorks and Canopy, along with moderated input costs, strategic acquisitions of 3form and BOK Modern, and significant federally funded transportation projects. By prioritizing innovation — especially in energy-efficient and digital solutions — the company is well-positioned for sustained growth, even in the face of broader market uncertainties.
Technical indicators show that AWI stock is currently trading above the 50-day SMA and 200-day SMA, and the 50-day SMA continues to read higher than the 200-day moving average, indicating a bullish trend.
FIX Stock Trades Above 50-Day SMA & 200-Day SMA
Image Source: Zacks Investment Research
What’s Driving the AWI’s Premium Valuation?
Rising Demand for Decarbonization Solutions Bodes Well for AWI
The push for energy efficiency and decarbonization is creating new opportunities for AWI. The company’s innovative TEMPLOK ceiling products, incorporating phase-change materials and mineral fiber tiles, help regulate building temperatures and reduce energy costs by up to 15%, making them an appealing choice for building owners.
AWI also introduced Low Embodied Carbon (LEC) products, including the Ultima LEC ceiling tiles, which feature the lowest embodied carbon among their peers. These offerings align with industry trends toward sustainability and compliance with standards like the proposed LEED v5 guidelines, which emphasize decarbonization.
The company’s efforts are further supported by initiatives such as the U.S. Department of Energy's Green Proving Ground program, where TEMPLOK is being tested, highlighting AWI’s positioning as a leader in energy-efficient solutions.
Armstrong World’s Innovation and Digital Platforms
Armstrong World is leveraging its ProjectWorks and Canopy platforms to drive growth. These platforms help AWI stand out in the market by enhancing customer engagement and boosting sales volumes and average unit values.
Armstrong World’s Acquisitions Driving Growth
AWI continues to execute its inorganic growth strategy, acquiring nine companies over the past seven years to strengthen its Architectural Specialties segment. In April 2024, AWI acquired 3form, LLC, a designer and manufacturer of architectural resin and glass products for walls, partitions, and ceilings, based in Salt Lake City, UT, with three U.S. production and design facilities.
Earlier in January 2024, AWI formed a strategic partnership with McKinstry by investing in Overcast Innovations, a McKinstry venture specializing in modular designs that enhance air quality, lighting, acoustics, and energy efficiency. This collaboration combines AWI’s expertise in ceiling systems with Overcast’s innovative modular approach.
Integration efforts for 3form and BOK Modern are progressing well, with both acquisitions contributing to growth.
Armstrong World’s Earnings Estimates are Going Up
The Zacks Consensus Estimate for Armstrong World’s 2024 and 2025 earnings per share has moved up 1.8% and 1.9%, respectively, in the past 30 days. The estimated figures for 2024 and 2025 indicate 16.2% and 10.6% year-over-year growth.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Image Source: Zacks Investment Research
How Should Investors Play the AWI Stock?
Armstrong World has been delivering strong financial performance and strategic growth, making it an attractive investment opportunity. Positive trends in EPS estimate revisions highlight growing analyst optimism about the company's earnings potential, which often aligns with stock price increases. Furthermore, management has raised its full-year 2024 guidance, projecting revenue growth of 10%-11% and an adjusted EBITDA increase of 12%-14%. These upward revisions reflect confidence in the company’s growth strategy and competitive positioning. While AWI trades at a premium relative to industry peers, its consistent outperformance and robust growth prospects justify the valuation.
Despite challenges in the renovation markets, Armstrong World has leveraged its digital platforms, acquisitions, and innovative products to adapt effectively. Federally funded transportation projects and energy-efficient solutions, such as TEMPLOK energy-saving ceilings, are expected to drive sustained growth through 2025 and beyond. With a Zacks Rank #2 (Buy), the company appears well-positioned for continued success. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.