Shares of Armstrong World Industries (AWI) Are on Sale - But Consider the Risk.

Armstrong World Industries may be fairly valued with strong growth indicators, but the 10 analysts following the company on average give it a hold rating. The analysts have set target prices ranging from $70 to $123 per share, for an average of $89.7. At today's price of $75.04, Armstrong World Industries is trading -16.34% away from its average target price, suggesting there is an analyst consensus of some upside potential.

Armstrong World Industries, Inc., together with its subsidiaries, designs, manufactures, and sells ceiling systems primarily for use in the construction and renovation of residential and commercial buildings in the United States, Canada, and Latin America. Based in Lancaster, PA, the mid-cap Industrials company has 2,960 full time employees. Armstrong World Industries has offered a 1.3% dividend yield over the last 12 months.

Armstrong World Industries has a trailing twelve month P/E ratio of 18.3, compared to an average of 21.46 for the Industrials sector. Based on its EPS guidance of 5.35, the company has a forward P/E ratio of 14.0. In terms of its earnings, the company is undervalued.

However, Armstrong World Industries is likely overvalued compared to the book value of its equity, since its P/B ratio of 6.6 is higher than the sector average of 3.7. The company's shares are currently trading 229.9% above their Graham number, implying that they are overvalued in terms of earnings and book value of equity.

Overall, the company's flat revenue growth trend and declining EPS could be giving analysts reason to sideline the stock.

2019-12-31 2020-12-31 2021-12-31
Revenue (MM) $1,038 $937 $1,107
Revenue Growth n/a -9.75% 18.11%
Gross Margins 38.1% 35.6% 36.6%
Gross Margins Growth n/a -6.56% 2.81%
Operating Margins 21.3% 18.1% 15.2%
Operating Margins Growth n/a -15.02% -16.02%
Earnings Per Share $4.32 -$2.07 $3.82
EPS Growth n/a -147.92% 284.54%
Free Cash Flow (MM) $111 $163 $107
FCF Growth n/a 46.68% -34.27%
Capital Expenditures (MM) -$71 -$55 -$80
Net Debt / EBITDA 1.39 -14.78 1.51
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.