American Woodmark Corporation
) recently announced a positive earnings surprise of nearly 200% in
its fiscal second quarter, which sent earnings estimates soaring in
the past 7 days. This manufacturer and distributor of cabinets and
vanities reached its 52-week high of $28.25 on November 26 and
became a Zacks #1 Rank (Strong Buy) on November 21. Shares have
advanced by a robust 101.4% year to date.
What Makes American Woodmark a Growth Pick?
On November 20, American Woodmark posted fiscal second-quarter
earnings per share of 14 cents, trouncing the Zacks Consensus
Estimate by 180% and significantly rebounding from a loss of 21
cents in the year-ago quarter. This marked the company's fifth
positive surprise in the past 8 quarters.
Net sales increased 24% from the year-ago quarter to $159.8
million, driven mostly by a more than 40% sales growth in the new
home construction business. Total revenue also beat the Zacks
Consensus Estimate of $140 million. The company distributes its
products through two sales channels: Home Center and New
Gross profit margin expanded 300 basis points to 15.5% on the back
of a rise in sales volume and lower fixed overhead expenses.
Soaring Earnings Momentum
All 5 estimates for fiscal 2013 have advanced in the past 7 days,
boosting the Zacks Consensus Estimate by 54.2% to 37 cents. This
suggests a year-over-year increase of 149%. For fiscal 2014, the
Zacks Consensus Estimate has jumped 23.1% to 96 cents over the same
time frame, as 3 of 4 total estimates headed upward. This
represents a year-over-year surge of 158.7%.
American Woodmark currently trades at a forward P/E of 82.47x,
reflecting a 258.6% premium to the peer group average of 23.00x.
Also, on a price-to-book basis, shares trade at 3.08x, a
substantial premium to the peer group average of 1.07x. Again, its
price-to-sales ratio of 0.72 is at a premium to the peer group
average of 0.44. Given its strong fundamentals, the premium
valuation is justified.
Chart Echoing Strength
Shares of American Woodmark have been trending upward since the
beginning of the year. The company rallied to hit a new 52-week
high on November 26 at $28.04, suggesting a bullish growth for the
rest of 2012. The stock has been consistently trading above its
200-day moving average since March 9, 2012. It has also remained
above its 50-day moving average since August 14, 2012.
Volume averages roughly 75K daily. The year-to-date return for the
stock is 101.4% compared to the S&P 500's return of 10.1%.
Founded in 1980 and headquartered in Winchester, Virginia, American
Woodmark Corporation manufactures and distributes kitchen cabinets
and vanities for the remodeling and new home construction markets.
The company's leading brands include American Woodmark, Timberlake,
Shenandoah Cabinetry, Potomac and Waypoint Living Spaces. The
company has a market cap of $411.5 million.
Want More of Our Best Recommendations?
Zacks' Executive VP, Steve Reitmeister, knows when key trades are
about to be triggered and which of our experts has the hottest
hand. Then each week he hand-selects the most compelling trades and
serves them up to you in a new program called
AMER WOODMARK (AMWD): Free Stock Analysis
To read this article on Zacks.com click here.