Trex Earnings: An Early Look

Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors, and Trex (NYSE: TREX  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

The housing industry has bounced back strongly in recent months, and with its decking and railing materials business, Trex is taking full advantage of the new boom. But will the good times last for the company? Let's take an early look at what's been happening with Trex over the past quarter and what we're likely to see in its quarterly report next Tuesday.

Stats on Trex

Analyst EPS Estimate

($0.18)

Year-Ago EPS

($0.54)

Revenue Estimate

$45.3 million

Change From Year-Ago Revenue

(12%)

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Will Trex keep on building up its share price?
Analysts ratcheted down their earnings-per-share estimates by a dime three months ago, but since then, they've been pretty steady on the company. Meanwhile, shareholders have looked increasingly optimistic, as the stock has soared nearly 20% since mid-November.

With its wood/plastic-composite materials, Trex markets its high-durability decking and railing supplies as environmentally friendly, using recycled plastic bags and other sources to repurpose waste into more weather-resistant materials. Throughout the past year, several housing-related niche companies have seen their fortunes turn around, with Trex being just one. For instance, faucet- and cabinet-supplier Masco and flooring specialist Lumber Liquidators both posted substantial rebounds for their shares on signs of improving sales demand and future potential growth.

Trex's specialty area helps it stand out from general retailers Home Depot and Lowe's right now. While it's easy for homeowners to get intimidated by the sheer scope of available remodeling options at a big-box store, Trex lets homeowners drill down on one particular project, making it manageable both financially and logistically. By catering to homeowners' need to take baby steps in a tough economy, Trex has built up a strong and growing business.

In Trex's earnings report, be sure to look for specific information about warranty claims. With the innovative materials that Trex develops, the company has stood behind its quality. Any signs of problems could be devastating to Trex's future prospects, but as long as warranty activity is minimal, it should point to further success for Trex.

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12/18/2014 4:02 PM
TREX $42.38 Up +0.83 +2.00%
Trex CAPS Rating: ****

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