On Mar 5, Zacks Investment Research downgraded
Armstrong World Industries, Inc.
) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
Following the release of its fourth-quarter 2012 results on
Feb 19, earnings estimates for this $3.13 billon company
witnessed a sharp downward revision. In the last 30 days, The
Zacks Consensus Estimate for 2013 decreased 14% to $2.44 per
share while that for 2014 was down 12% to $3.05 per share.
Though Armstrong World's fourth-quarter earnings per share of
earnings increased 89% to 34 cents, beating the Zacks Consensus
Estimate by a penny, sales declined 2% to $613 million.
Unfavorable foreign exchange, lower volume particularly in Europe
and unfavorable mix offset the benefits from higher price.
The Building Products segment was the lone segment to witness
revenue growth of 1% as higher volumes in the North American
commercial business managed to mitigate volume declines in
Europe. However, the Resilient Flooring segment's revenues dipped
3%, driven by lower volumes in Europe and in North America where
continued weakness in commercial sectors tied to public spending
and lower home center sales dragged down volumes. The Wood
Flooring segments revenues declined 3% due to the sale of the
Patriot distribution business
For 2013, the company expects sales to be in the $2.7 to $2.8
billion, up 3% to 7% from 2012. Adjusted EBITDA is expected to be
in the $390 to $420 million range, down 3% to up 5% compared with
2012. Adjusted EPS is expected to lie in the band of $2.30
to $2.60, down 8% to up 4% compared with 2012. For the first
quarter of 2013, sales are expected to be between $600 and $650
million and adjusted EBITDA to be in the range of $68 to $83
Armstrong's volumes are expected to remain affected as global
markets continue to struggle, particularly Europe. Furthermore,
the outlook for residential repair and remodel activity also
remains weak as customers remain cautious regarding their
Other Stocks to Consider
Among the other stocks in the same industry,
James Hardie Industries plc
) hold a Zacks #2 Rank (Buy) and are favorable options for
ARMSTRONG WORLD (AWI): Free Stock Analysis
HEADWATERS INC (HW): Free Stock Analysis
JAMES HARDI-ADR (JHX): Free Stock Analysis
MASCO (MAS): Free Stock Analysis Report
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