Skip to main content

Trex Company(TREX-N)

Today's Change
Real-Time Last Update Last Sale Cboe BZX Real-Time

Why Trex Stock Soared Today

Motley Fool - Tue Aug 1, 2023

What happened

Trex(NYSE: TREX) had a much stronger than expected quarter, and Wall Street is adjusting its expectations upward as a result. Investors are excited about what the company is building, sending shares up as much as 10% on Tuesday.

So what

Trex is a manufacturer of composite decking products. The stock is down big since the beginning of 2022 due to investor fears about a slowdown in housing and home renovations due to rising interest rates, but the company showed in the latest quarter it has its house in order.

Trex earned $0.71 per share in the third quarter on revenue of $356.5 million, easily topping Wall Street expectations for $0.53 per share in earnings on sales of $318.5 million. The company reported a gross margin of 43.9% and an EBITDA margin of 32.8% in the quarter, showing the results of a previously announced cost-cutting program.

"Trex delivered considerable margin expansion driven by production optimization and fast return cost saving programs," CEO Bryan Fairbanks said. "Additionally, investments in branding programs, and our expanding decking and railing product portfolio are yielding strong returns."

Wall Street took notice. At least eight analysts upped their price target on Trex on Tuesday following the Monday night earnings release.

Now what

Trex expects to report revenue of $280 million to $290 million in the current quarter, well above the $264 million consensus. For the full year, it expects revenue of $1.04 billion to $1.06 billion, within range of what analysts expect.

Trex is a longtime outperformer that appears to be getting its momentum back. The road ahead could be volatile, as end markets continue to adjust to higher interest rates and a dynamic housing environment, but investors are rightly excited about the long-term opportunity.

10 stocks we like better than Trex
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Trex wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of August 1, 2023

Lou Whiteman has positions in Trex. The Motley Fool has positions in and recommends Trex. The Motley Fool has a disclosure policy.

Paid Post: Content produced by Motley Fool. The Globe and Mail was not involved, and material was not reviewed prior to publication.