Armstrong World (AWI) Hits 52-Week High: What's Driving It?

On Oct 3, Armstrong World Industries, Inc. AWI crafted a 52-week high of $52.05 during intra-day trading, finally closing lower at $51.55.

Investors are optimistic on this Zacks Rank #3 (Hold) company’s focus on innovation in product pipeline and customer relationships. Its raised guidance has also boosted their confidence.

Armstrong World has a market cap of $2.7 billion. The average volume of shares traded over the last three months is approximately 422.3K. We note that the company has beaten the Zacks Consensus Estimate in three of the trailing four quarters, the average positive earnings surprise being 0.73%.

Armstrong World Industries Inc Price and Consensus

 

Armstrong World Industries Inc Price and Consensus | Armstrong World Industries Inc Quote

The stock has gained 25.2% in a year’s time, higher than the S&P 500’s gain of 17.9%. Armstrong World has also outperformed the industry’s gain of 19% with respect to share price movement during the same time frame.

What's Driving Armstrong World?

During the second-quarter conference call, Armstrong World raised its guidance for 2017 on the back of healthy sales growth in the first half of the year and expectations of improving performance in international markets for the balance of the year. The company also believes volume growth will likely stem from repair and remodel, as well as new construction activity.

Notably, Armstrong World has been selected to provide ceiling solutions for the Metropolitan Transportation Authority's East Side Access megaproject — the largest transportation construction project underway in the United States. These ceilings are scheduled to ship in early 2018.  Given its broad product portfolio, design services, construction expertise and technical competencies, a combination that is unmatched in the ceilings industry, Armstrong World was an obvious choice.

This marks the third win for Armstrong World in a series of large transportation projects in Manhattan. The first, Fulton Center, the gateway to Lower Manhattan, opened in 2014, and the second, South Ferry Station, was unveiled last spring. The East Side Access is anticipated to open by December 2022.

Armstrong World’s performance in America is likely to benefit from consistent improvement in average unit value ("AUV"), driven by the mix-up trend within the industry, along with good pricing realization and volume growth. Further, improving global oil prices will likely support volume growth in international markets over the medium term.

Moreover, positive estimate revisions reflect optimism in the company’s potential as earnings growth is often an indication of robust prospects (and stock price gains) ahead. Estimates for Armstrong World have moved up in the past 90 days, reflecting analysts’ optimistic outlook. The earnings estimate for 2017 has inched up 1.1%, while that of 2018 moved up 1.3%. Also, the company’s positive long-term earnings growth rate of 11.9% holds promise.

Stocks to Consider

Better-ranked stocks in the same sector include Rayonier Inc. RYN, Potlatch Corporation PCH and Owens Corning OC. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Rayonier has an expected long-term earnings growth rate of 5%.

Potlatch Corporation has an expected long-term earnings growth rate of 5%.

Owens Corning has an expected long-term earnings growth rate of 14.8%.

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