Is Trex Company Inc. (TREX) Stock Cheap Or Risky?

As of Thursday close, Trex Company Inc.’s (NYSE:TREX) stock was up $4.79, moving up 8.55 percent to $60.84. The average number of shares traded per day over the past five days has been 2,283,900 shares. 3 times new highs have been achieved over the past 5 days, with a $4.86 gain in that time frame. In the last twenty days, the average volume was 1,549,005, while in the previous 50 days, it was 1,567,658.

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Since last month, TREX stock retreated -3.04%. Shares of the company fell to $51.76 on 05/06/22, the lowest level in the past month. A 52-week high of $140.98 was reached on 01/03/22 after having rallying from a 52-week low of $51.76. Since the beginning of this year, TREX’s stock price has dropped by -54.94% or -$74.19, and marked a new high 1 time. However, the stock has declined by -56.84% since its 52-week high.

Trex Company Inc. (TREX) last reported insider trading activity 162 days ago on Dec 02. Golden Michael F, the Director of the company, disposed of 4,795 shares for $133.53 on Dec 02. It resulted in a $640,276 divestment by the insider. Gupp William R. sold 3,488 shares at an average price of $127.89 on Nov 11. The insider now owns 101,305 shares following the transaction. On Nov 11, President, Trex Residential Pr Zambanini Adam Dante sold 2,055 shares at $127.89 apiece. The transaction was valued at $262,814.

Valuation Metrics

Right now, Trex Company Inc. (TREX) has a P/E ratio of about 33.74. The stock’s beta is 1.45. Besides these, the trailing price-to-sales (P/S) ratio of 5.87, the price-to-book (PB) ratio of 9.69, and the price-to-cash flow ratio of 71.14 may also be considered.

Financial Health

In the three months ended September 29, Trex Company Inc.’s quick ratio stood at 3.60, while its current ratio was 4.50, showing that the company is able to pay off its debt. On the profitability front, the trailing twelve-month gross margin is 38.50% percent. In the year ended September 29, operating margins totaled 23.00%. Based on annual data, TREX earned $460.5 million in gross profit and brought in $1.2 billion in revenue.

A company’s management is another factor that investors consider when determining the profitability of an investment. In the past year, return on investment (ROI) was 28.80%. Return on equity (ROE) for the past 12 months was 31.10%.

According to the earnings report, the company had a higher net income in the recent quarter than it did in the previous quarter. TREX’s revenue rose 27.62% to $303.96 million during the quarter, while net income inched up to $339.23 million. While analysts expected Trex Company Inc. to report $0.58 quarterly earnings, the actual figure was $0.64 per share, beating the consensus estimate by 10.30%. During the quarter, the company generated $105.42 million in EBITDA. The liabilities of Trex Company Inc. were 251.33 million at the end of its most recent quarter ended September 29, and its total debt was $36.94 million. The value of shareholders’ equity is $113.2 million.

Technical Picture

This quick technical analysis looks at Trex Company Inc.’s (TREX) price momentum. With a historical volatility rate of 85.32%, the RSI 9-day stood at 53.51% on 12 May.

With respect to its five-day moving average, the current Trex Company Inc. price is up by +8.68% percent or $4.86. At present, TREX shares trade -5.65% below its 20-day simple moving average and -52.69% percent below its 100-day simple moving average. However, the stock is currently trading approximately -25.92% below its SMA50 and -36.03% below its SMA200.

Stochastic coefficient K was 52.75% and Stochastic coefficient D was 41.92%, while ATR was 4.59. Given the Stochastic reading of 72.64% for the 14-day period, the RSI (14) reading has been calculated as 48.80%. As of today, the MACD Oscillator reading stands at 0.42, while the 14-day reading stands at 0.08.

Analyst Ratings

Credit Suisse upgraded its rating on Trex Company Inc. (NYSE: TREX) to a Neutral in a note to investors on May 11, 2022. The analysts firm previously had an Underperform rating on the stock.Trex Company Inc. (TREX) has been rated Hold by analysts. According to 2 brokerage firms, TREX is a sell, and 8 firms recommend it is a Hold. There are 1 analyst who say the stock is underweight. A total of 0 analysts rate Trex Company Inc. stock as buy, with 7 recommending it as overweight.

With a median target price of $73.50, the current consensus forecast for the stock is $62.00 – $113.00. Based on these forecasts, analysts predict Trex Company Inc. (TREX) will achieve an average price target of $78.83.


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