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Jeld-Wen Holding Inc(JELD-N)

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Why Jeld-Wen Stock Is Up Big This Week

Motley Fool - Thu May 11, 2023

What happened

Building products manufacturer Jeld-Wen Holdings'(NYSE: JELD) quarterly results were a lot better than analysts anticipated, suggesting the company is handling weakness in the housing market well. Investors were pleased with the results, sending shares of Jeld-Wen up 18% for the week, according to data provided by S&P Global Market Intelligence, as of Thursday afternoon.

So what

Jeld-Wen makes windows, doors, and wall systems for interior and exterior applications. The company had a difficult time in 2022, squeezed by higher costs and softening demand as the housing and construction sectors adjusted to higher rates.

But things are looking up so far in 2023. On May 8, the company reported adjusted first-quarter earnings of $0.35 per share on sales of $1.22 billion. That beat expectations for earnings of $0.06 per share on sales of $1.1 billion.

Net revenue was up 4.4% year over year, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin increased by 80 basis points to 7.7%.

"We made progress in the first quarter to simplify and strengthen Jeld-Wen, which, combined with more-favorable-than-expected market conditions, resulted in improved financial performance," CEO William J. Christensen said in a statement. "During this time of weaker demand, our associates carefully controlled costs while continuing to deliver on our customers' expectations."

Postearnings, at least four banks upped their price target for Jeld-Wen.

Now what

The company is operating the best it can but continues to face a difficult environment. It also continues to streamline its operations. In April, Jeld-Wen announced plans to sell its Australia and Asia business to Platinum Equity, raising about $461 million to be used to pay down debt.

Jeld-Wen updated its full-year guidance following the strong quarter and to reflect the sale. The company is cutting its revenue outlook for the year by $500 million to $4 billion to $4.4 billion. But stripping out Australia and Asia from the original guidance, the new estimate calls for a slight uptick in sales for the remaining business.

As long as the macroeconomic uncertainty continues in North America and Europe, it will be hard for Jeld-Wen to thrive. But the company made its case that it is making the best of the situation it is in, and that was good for a boost in the share price this week.

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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