A 'Weaker Market' Has This Housing Materials Maker's Stock 30%
Key Takeaways
- Trex Co.’s results and outlook disappoint as spending on housing materials slows.
- The maker of decking products said the repair and remodeling sector continued to face weaker market conditions, and it expects that to continue.
Trex Co. (TREX) shares sank to multiyear lows after the maker of deck-building materials posted worse-than-expected results and lowered its outlook, citing a slump in spending for housing projects.
While the company saw spending in the repair and remodeling sector improving, CEO Bryan Fairbanks said, “the second half of the season reflected the weaker market conditions that the industry has experienced in the past two years.” Trex expects “this trend to continue in the seasonally slower fourth quarter,” he said.
Shares of Trex were recently off some 28%, though they’re slightly off earlier lows.
Why This News Matters
A prolonged housing slowdown continues to weigh on home improvement companies, as Trex Co.’s results show. Demand for big-ticket remodeling projects has cooled in an environment of higher interest rates and tighter household budgets.
Trex reported third-quarter adjusted earnings per share of $0.51, missing Visible Alpha forecasts by $0.06. Revenue gained 22.1% to $285.3 million, also short of estimates.
The company nowsees fourth-quarter sales of $140 million to $150 million, below its earlier estimates, and reported a full-year outlook of $1.15 billion to $1.16 billion. That’s basically the same as 2024, compared to its previous expectation of an increase of 5% to 7%.
Trex also cut its 2025 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance to 28.0% to 28.5% versus the earlier outlook of more than 31%.
With Thursday’s 28% decline, shares of Trex slumped to their lowest level in more than six years. Read Investopedia’s full daily markets roundup here.