Bull of the Day: American Woodmark (AMWD) - Bull of the Day
July 17 2013 - 4:55AM
Zacks
Continued recovery in the
housing market and resilient consumer demand have resulted in
rising estimates, sending this cabinet maker to Zacks rank #1
(Strong Buy).
About the
Company
American Woodmark
Corporation (AMWD) is a leading manufacturer and
distributor of kitchen and bath cabinets for remodeling and new
home construction markets.
The company manufactures
cabinets under four major brands: American Woodmark,
Timberlake Cabinetry, Shenandoah Cabinetry and Waypoint Living
Spaces and sells more than 435 cabinet lines in a wide variety of
design, materials and finishes.
Its products are sold
through a network of independent dealers and distributors, and
directly to major builders and Lowe's and The Home Depot. The
company operates 11 manufacturing facilities and 9 builder service
centers across the country.
Excellent
Quarterly Results
The company reported its
fourth quarter ended April 30, 2013 on June 4, 2013. Net sales rose
by 26% compared with the fourth quarter of the prior fiscal year
to $171.1 million. Net income for the quarter was $5.2
million, or $0.34 per diluted share, compared with a net loss
in the fourth quarter of fiscal year 2012 of ($6.0 million),
or ($0.42) per diluted share.
The results were
substantially ahead of the Zacks consensus estimate of $0.17 per
share.
The Company experienced
double digit sales gains in each of its sales channels during the
quarter, led by new construction sales growth of more than 40%.
Remodeling market also recorded a decent mid-single-digit
improvement, resulting in a double-digit surge in
sales.
The company's gross
profit margin for the quarter was 18.9% of net sales, up from about
jump over the 15% gross margin rate for the first 3 quarters
and well above the prior year's 12.7% of net
sales.
Estimates
Revisions
As a result of strong
results, Zacks consensus estimate for the quarter ended July 31 now
stands at $0.31 per share up from $0.23 per share, 60 days ago. The
estimate for the current year is also up to $1.38 per share from
$1.04 per share earlier.
Rising estimates sent
AMWD to a Zacks rank#1 on June 6, 2013. AMWD has a solid track of
earnings surprises—with an average positive surprise of 215.8% for
the last four quarters.
The Bottom
Line
The housing market
continues on its growth trajectory. Inventories of new and existing
homes remain at low levels and while mortgage rates have risen from
their recent record lows, they are still quite low from historical
perspective. Further with improving job market, the demand from
remodeling market will also improve going
forward.
AMWD is a Zacks Rank#1
(Strong Buy) stock. It also has a Zacks recommendation of
“Outperform” and looks poised to deliver excellent
returns.
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