Trex (TREX) Valuation Check After Sharp 1-Year Share Price Decline

Trex Company (TREX) has been on a bumpy ride lately, with shares sliding over the past year even as revenue edges higher. That disconnect sets up an interesting moment for long term investors.

See our latest analysis for Trex Company.

The latest share price of $34.86 leaves Trex with a steep year to date share price return of around minus 49 percent. Its 1-year total shareholder return of roughly minus 51 percent shows momentum has clearly been fading despite modest revenue growth.

If this pullback has you rethinking where growth could come from next, it might be worth scanning fast growing stocks with high insider ownership to spot other companies where insiders are backing strong expansion stories.

With the share price cut nearly in half even as revenue inches forward and analysts still see upside to their targets, investors now face a key question: Is Trex trading below its true potential, or is future growth already fully priced in?

Most Popular Narrative: 20% Undervalued

With Trex's fair value pegged at $43.58 against a last close of $34.86, the most followed narrative argues the market is discounting future earnings power.

Continuous manufacturing innovation, such as the rollout of Trex's new Arkansas facility and level loaded production strategy, is already improving operational efficiency and is expected to result in structurally higher gross and EBITDA margins going forward.

Read the complete narrative.

Curious how a mature building products company can still justify a premium future earnings multiple, rising margins, and steady top line expansion, all at once?

Result: Fair Value of $43.58 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, softer repair and remodel demand, along with intensifying competition on price and product, could easily derail the margin recovery baked into current expectations.

Find out about the key risks to this Trex Company narrative.

Build Your Own Trex Company Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a custom view in just minutes: Do it your way

A great starting point for your Trex Company research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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