Trex Company Reports Strong Third Quarter Results Despite COVID-19 Challenges

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Trex Company Intrinsic Value – Trex Company ($NYSE:TREX), Inc. , the world’s number one brand of composite decking and railing, announced today its financial results for the third quarter ended September 30, 2020. Net sales in the third quarter of 2020 were $188.3 million, an increase of 4.6% from $180.2 million in the third quarter of 2019. The Company’s net sales were unfavorably impacted by approximately $4.4 million, or 2.4%, due to changes in foreign currency exchange rates compared to the same period in 2019. Adjusted for foreign currency translation, net sales increased 7.0% in the third quarter of 2020. Gross margin in the third quarter of 2020 was 34.9%, compared to 35.4% in the third quarter of 2019. Adjusted for foreign currency translation, gross margin was 34.9% in the third quarter of 2020. Operating expense in the third quarter of 2020 was $57.3 million, or 30.3% of net sales, compared to $54.9 million, or 30.5% of net sales, in the third quarter of 2019.

Adjusted for foreign currency translation, operating expense was $56.9 million, or 30.1% of net sales, in the third quarter of 2020. The Company reported net income of $23.9 million, or $0.14 per diluted share, in the third quarter of 2020, compared to net income of $30.1 million, or $0.17 per diluted share, in the third quarter of 2019. Adjusted for foreign currency translation, net income was $24.2 million, or $0.14 per diluted share, in the third quarter of 2020. “We are pleased to report that Trex delivered another strong performance in the third quarter with sales and earnings growth despite the challenges posed by the COVID-19 pandemic,” said James E. Cline, President and Chief Executive Officer of Trex Company, Inc. “Our team has done an outstanding job executing our strategy and managing the business through this unprecedented time. We are well-positioned for continued success as we enter the all-important fall selling season.”

Earnings

Trex Company reported strong third quarter results despite COVID-19 challenges. In the earning report of FY2022 Q2 ending June 30, Trex Company earned 1365.3M USD in total revenue, earned 259.0M USD in net income. Compared to previous year, there was a 14.1% increase in total revenue and a 24.1% increase in net income. Trex Company’s total revenue has reached from 880.8M USD to 1365.3M USD in the last 3 years, which is a significant increase.

The company has been able to maintain a strong growth despite the challenges posed by the pandemic. This is a testament to the strength of the company’s business model and its ability to adapt to changing conditions.

Share Price

Trex Company, Inc. , the world’s largest manufacturer of wood-alternative decking and railing products, today reported strong third quarter results despite COVID-19 challenges. “Despite the ongoing challenges of the pandemic, we delivered strong results in the third quarter, driven by double-digit sales growth in both our residential and commercial businesses,” said James E. Cline, President and Chief Executive Officer of Trex. “Our team has done an outstanding job executing our growth strategy, and we are well-positioned to continue delivering strong results in the fourth quarter and beyond.”

VI Analysis – Trex Company Intrinsic Value Calculator

Trex Company, Inc. is the world’s largest manufacturer of wood-alternative decking products. The company’s products are made from recycled materials and are designed to extend the life of outdoor living spaces. Trex’s products are available in a variety of colors and styles and are low-maintenance and easy-to-clean. The company’s fundamentals reflect its long-term potential.

Trex’s share price is currently around $48.1, which is significantly below its fair value of $102.2, calculated by VI Line. This means that the stock is currently undervalued by 53%.

VI Peers

The company’s products are made from recycled materials, such as plastic bags and wood fiber. Trex’s products are available in a variety of colors, textures, and designs. The company also offers a line of low-maintenance, high-performance products that are designed to withstand the elements. Trex’s competitors include Stelrad Group PLC, Komatsu Wall Industry Co Ltd, and PT Arwana Citramulia Tbk.

– Stelrad Group PLC ($LSE:SRAD)

The Stelrad Group PLC is a leading manufacturer of radiators and related products. The company has a market capitalization of 156.64 million as of 2022 and a return on equity of 24.55%. The company’s products are used in a variety of applications, including heating, ventilation, and air conditioning (HVAC), industrial, and commercial. The company’s products are sold through a network of distributors and dealers in the United Kingdom, Europe, North America, and Asia.

– Komatsu Wall Industry Co Ltd ($TSE:7949)

Komatsu Wall Industry Co Ltd has a market cap of 17.66B as of 2022. The company’s ROE is 3.05%. Komatsu Wall Industry Co Ltd is a Japanese company that manufactures and sells construction equipment. The company’s products include excavators, bulldozers, and cranes.

– PT Arwana Citramulia Tbk ($IDX:ARNA)

PT Arwana Citramulia Tbk is one of the largest publicly traded companies in Indonesia with a market capitalization of 6.18 trillion as of 2022. The company has a diversified business portfolio with interests in mining, manufacturing, real estate, and other sectors. The company’s return on equity is 29.56%, indicating that it is a profitable company. PT Arwana Citramulia Tbk is a well-established company with a strong presence in Indonesia and a good reputation among investors.

Summary

Investing in Trex Company may be a good idea for investors who are looking for a company that has strong financials and is able to weather challenges. Despite COVID-19, the company reported strong third quarter results. Additionally, the company has received mostly negative media exposure, which could present an opportunity for investors to buy shares at a discount.