NYSE:TREX

Stock Analysis Report

Executive Summary

Trex Company, Inc. manufactures and distributes wood/plastic composite products, and related accessories primarily for the residential and commercial decking, and railing applications in the United States.


Snowflake Analysis

Flawless balance sheet with reasonable growth potential.


Similar Companies

Share Price & News

How has Trex Company's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: TREX has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-0.9%

TREX

1.2%

US Building

0.6%

US Market


1 Year Return

48.1%

TREX

37.0%

US Building

24.6%

US Market

Return vs Industry: TREX exceeded the US Building industry which returned 35.5% over the past year.

Return vs Market: TREX exceeded the US Market which returned 24.7% over the past year.


Shareholder returns

TREXIndustryMarket
7 Day-0.9%1.2%0.6%
30 Day10.5%4.1%3.0%
90 Day9.6%6.3%10.6%
1 Year48.1%48.1%39.1%37.0%27.3%24.6%
3 Year189.2%189.2%27.6%21.5%50.5%40.8%
5 Year363.0%363.0%59.7%39.2%78.9%59.1%

Price Volatility Vs. Market

How volatile is Trex Company's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Trex Company undervalued compared to its fair value and its price relative to the market?

42.99x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: TREX ($95.87) is trading above our estimate of fair value ($93.45)

Significantly Below Fair Value: TREX is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: TREX is poor value based on its PE Ratio (41.7x) compared to the Building industry average (23.1x).

PE vs Market: TREX is poor value based on its PE Ratio (41.7x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: TREX is poor value based on its PEG Ratio (2.4x)


Price to Book Ratio

PB vs Industry: TREX is overvalued based on its PB Ratio (13.2x) compared to the US Building industry average (2.4x).


Next Steps

Future Growth

How is Trex Company forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

16.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: TREX's forecast earnings growth (17.5% per year) is above the savings rate (1.7%).

Earnings vs Market: TREX's earnings (17.5% per year) are forecast to grow faster than the US market (14.3% per year).

High Growth Earnings: TREX's earnings are forecast to grow, but not significantly.

Revenue vs Market: TREX's revenue (10.4% per year) is forecast to grow faster than the US market (7.5% per year).

High Growth Revenue: TREX's revenue (10.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: TREX's Return on Equity is forecast to be high in 3 years time (29.8%)


Next Steps

Past Performance

How has Trex Company performed over the past 5 years?

25.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: TREX has a high level of non-cash earnings.

Growing Profit Margin: TREX's current net profit margins (18.7%) are lower than last year (19.2%).


Past Earnings Growth Analysis

Earnings Trend: TREX's earnings have grown significantly by 25.3% per year over the past 5 years.

Accelerating Growth: TREX's earnings growth over the past year (5.3%) is below its 5-year average (25.3% per year).

Earnings vs Industry: TREX earnings growth over the past year (5.3%) exceeded the Building industry -5.5%.


Return on Equity

High ROE: TREX's Return on Equity (31.7%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Trex Company's financial position?


Financial Position Analysis

Short Term Liabilities: TREX's short term assets ($307.8M) exceed its short term liabilities ($87.5M).

Long Term Liabilities: TREX's short term assets ($307.8M) exceed its long term liabilities ($59.7M).


Debt to Equity History and Analysis

Debt Level: TREX is debt free.

Reducing Debt: TREX has no debt compared to 5 years ago when its debt to equity ratio was 2.8%.

Debt Coverage: TREX has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: TREX has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: TREX has a high level of physical assets or inventory.

Debt Coverage by Assets: Insufficient data to determine if TREX's debt is covered by short term assets.


Next Steps

Dividend

What is Trex Company's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage1.7%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate TREX's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate TREX's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if TREX's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if TREX's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of TREX's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

What is the CEO of Trex Company's salary, the management and board of directors tenure and is there insider trading?

4.4yrs

Average management tenure


CEO

Jim Cline (67yo)

4.4yrs

Tenure

US$2,635,610

Compensation

Mr. James E. Cline, also known as Jim, serves as Non-Executive Director at Latham Pool Products since July 2019. Mr. Cline has been the President and Chief Executive Officer of Trex Co. Inc. since August 1 ...


CEO Compensation Analysis

Compensation vs Market: Jim's total compensation ($USD2.64M) is below average for companies of similar size in the US market ($USD6.46M).

Compensation vs Earnings: Jim's compensation has been consistent with company performance over the past year.


Management Age and Tenure

4.4yrs

Average Tenure

49yo

Average Age

Experienced Management: TREX's management team is considered experienced (3.5 years average tenure).


Board Age and Tenure

6.9yrs

Average Tenure

66yo

Average Age

Experienced Board: TREX's board of directors are considered experienced (6.9 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellUS$788,61208 Aug 19
Christopher Gerhard
EntityIndividual
Role
Head of Sales
Vice President of Sales
Shares9,724
Max PriceUS$81.10
SellUS$1,761,75126 Jun 19
Jay Scripter
EntityIndividual
Shares25,476
Max PriceUS$69.19

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Jim Cline (67yo)

    President

    • Tenure: 4.4yrs
    • Compensation: US$2.64m
  • William Gupp (59yo)

    Senior VP

    • Tenure: 18.7yrs
    • Compensation: US$1.24m
  • Adam Zambanini (42yo)

    President of Trex Residential Products

    • Tenure: 1.5yrs
    • Compensation: US$1.01m
  • Christopher Gerhard (46yo)

    Vice President of Sales

    • Tenure: 7.6yrs
    • Compensation: US$885.78k
  • Bryan Fairbanks (49yo)

    Executive VP & CFO

    • Tenure: 4.4yrs
    • Compensation: US$1.09m
  • Jacob Rudolph

    Vice President of Human Resources

    • Tenure: 2.7yrs
  • S. Adkins

    Vice President of Marketing

    • Tenure: 1.5yrs
  • Viktoriia Nakhla

    AdvisIRy Partner


    Board Members

    • Ron Kaplan (68yo)

      Chairman of the Board

      • Tenure: 9.7yrs
      • Compensation: US$180.00k
    • Jay Gratz (66yo)

      Independent Director

      • Tenure: 12.9yrs
      • Compensation: US$138.00k
    • Dick Posey (72yo)

      Independent Director

      • Tenure: 10.7yrs
      • Compensation: US$136.50k
    • Patricia Robinson (66yo)

      Lead Independent Director

      • Compensation: US$148.83k
    • Michael Golden (65yo)

      Independent Director

      • Tenure: 6.9yrs
      • Compensation: US$134.67k
    • Jerry Volas (64yo)

      Independent Director

      • Tenure: 5.8yrs
      • Compensation: US$134.50k
    • Kristine Juster (56yo)

      Director

      • Tenure: 0.3yrs
    • Jim Cline (67yo)

      President

      • Tenure: 4.4yrs
      • Compensation: US$2.64m

    Company Information

    Trex Company, Inc.'s company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: Trex Company, Inc.
    • Ticker: TREX
    • Exchange: NYSE
    • Founded: 1996
    • Industry: Building Products
    • Sector: Capital Goods
    • Market Cap: US$5.761b
    • Shares outstanding: 58.34m
    • Website: https://www.trex.com

    Number of Employees


    Location

    • Trex Company, Inc.
    • 160 Exeter Drive
    • Winchester
    • Virginia
    • 22603
    • United States

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    TREXNYSE (New York Stock Exchange)YesCommon StockUSUSDApr 1999
    TRRDB (Deutsche Boerse AG)YesCommon StockDEEURApr 1999

    Biography

    Trex Company, Inc. manufactures and distributes wood/plastic composite products, and related accessories primarily for the residential and commercial decking, and railing applications in the United States. It offers Trex Transcend, Trex Enhance, and Trex Select protective shells for protection against fading, staining, mold, and scratching; and Trex Hideaway, a hidden fastening system for grooved boards. The company also provides railing products, such as Trex Transcend Railing for use with Trex decking products and other decking materials; Trex Select Railing for simple clean finished look; and Trex Signature aluminum railing for contemporary look. In addition, it offers Trex Seclusions fencing product, which includes structural posts, bottom and top rails, pickets, and decorative post caps; steel deck framing systems under the Trex Elevations name; Trex DeckLighting, a line of energy-efficient LED dimmable deck lighting for use on posts, floors, and steps; and Trex LandscapeLighting products. Further, the company acts as a licensor in various licensing agreements with third parties to manufacture and sell products under Trex name, including Trex Outdoor Furniture; Trex RainEscape, an above joist deck drainage system; Trex CustomCurve that allows contractors to heat and bend Trex products; Trex Pergola, a cellular PVC product; Trex Latticeworks outdoor lattice boards; Trex Cornhole boards; Diablo Trex Blade, a saw blade for wood-plastic composite decking; Trex SpiralStairs and structural steel posts; and Trex Outdoor Kitchens, Cabinetry, and Storage. Additionally, it offers architectural and aluminum railing systems, custom railing options, and portable stage platforms. The company sells its products through wholesale distributors, retail lumber dealers, and Home Depot and Lowe’s stores, as well as through its direct sales staff, independent sales representatives, and bidding on projects. The company was founded in 1996 and is headquartered in Winchester, Virginia. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/23 23:54
    End of Day Share Price2020/01/23 00:00
    Earnings2019/09/30
    Annual Earnings2018/12/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.