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Category: Stock Market and American Woodmark
Date: 27 November 2019 Stock Price: $103.80 We take a look at the 2nd quarter 2020 earnings report from American Woodmark, the manufacturer and distributor of kitchen, bath and home organization products.
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About American Woodmark Corporation
American Woodmark Corporation manufactures and distributes kitchen, bath and home organization products for the remodeling and new home construction markets. Its products are sold on a national basis directly to home centers, builders and through a network of independent dealers and distributors. At July 31, 2019, the Company operated eighteen manufacturing facilities in the United States and Mexico and eight primary service centers located throughout the United States
Overview of American Woodmark's 3rd quarter 2020 earnings report
Data below refers to the latest quarter unless specified otherwise:
- Net sales $428.017 million (up from $ 424.878 million for the same quarter of last year)
- Net sales increased by 0.73% over the last 12 months
- Cost of sales & distribution: $340.966 (down from $338.116 million for the same quarter of last year)
- Cost of sales & distribution increased by 0.84% over the last 12 months
- Net income: $22.163 millon (up from $18.488 million for the same quarter of last year)
- Net income per diluted share $ 1.31 (up from $1.05 for the same quarter of last year)
- PE ratio of American Woodmark: 19.5
- Diluted weighted average shares outstanding: 16.995 million (down from 17.588 million for the same quarter of last year
- Cash & cash equivalents $51.435 million
- Cash and cash equivalents per share: $3.02
- Cash and cash equivalents makes up 2.9% of American Woodmark's market capital
- Cash and cash equivalents makes up 3.2% of American Woodmark's total assets
- Customer receivables: $120.118 million
- Customer receivables makes up 7.5% of the group's total assets (we believe anything more than 20% is alarming)
- Stockholders' equity of American Woodmark: $674.908 million
- Stockholders equity per share: $39.71
- American Woodmark is trading at 2.6 times its stockholders equity per share which is within the expected range of between 2 and 4 times that most firms tend to trade at
- Net cash provided by operating activities for 6 months of fiscal 2020: $86.232 million
- Cash from operating activities per share for the 6 months of fiscal 2020: $5.07
American Woodmark management commentary on their 3rd quarter 2019 earnings
WINCHESTER, Va., Nov. 26, 2019 /PRNewswire/ -- American Woodmark Corporation (NASDAQ: AMWD) (the "Company") today announced results for its second fiscal quarter ended October 31, 2019.
"Relative to the overall market, we are pleased with our revenue and margin performance in the second fiscal quarter," said Cary Dunston, Chairman and CEO. "Our new construction and stock home center business net sales growth was strong. Adjusted EBITDA margins improved over the prior year as our operational performance allowed us to continue to offset much of the cost headwinds we are facing."
Cash provided by operating activities for the first six months of the current fiscal year was $86.2 million and free cash flow totaled $66.1 million. The Company paid down $72.0 million of its term loan facility during the first six months of the current fiscal year.
"Relative to the overall market, we are pleased with our revenue and margin performance in the second fiscal quarter," said Cary Dunston, Chairman and CEO. "Our new construction and stock home center business net sales growth was strong. Adjusted EBITDA margins improved over the prior year as our operational performance allowed us to continue to offset much of the cost headwinds we are facing."
Cash provided by operating activities for the first six months of the current fiscal year was $86.2 million and free cash flow totaled $66.1 million. The Company paid down $72.0 million of its term loan facility during the first six months of the current fiscal year.
Free cash flow
To better understand trends in our business, we believe that it is helpful to subtract amounts for capital expenditures consisting of cash payments for property, plant and equipment and cash payments for investments in displays from cash flows from continuing operations which is how we define free cash flow. Management believes this measure gives investors an additional perspective on cash flow from operating activities in excess of amounts required for reinvestment. It also provides a measure of our ability to repay our debt obligations.
Net leverage
Net leverage is a performance measure that we believe provides investors a more complete understanding of our leverage position and borrowing capacity after factoring in cash and cash equivalents that eventually could be used to repay outstanding debt. We define net leverage as net debt (total debt less cash and cash equivalents) divided by the trailing 12 months Adjusted EBITDA. A reconciliation of these non-GAAP financial measures and the most directly comparable measures calculated and presented in accordance with GAAP are set forth on the following tables:
To better understand trends in our business, we believe that it is helpful to subtract amounts for capital expenditures consisting of cash payments for property, plant and equipment and cash payments for investments in displays from cash flows from continuing operations which is how we define free cash flow. Management believes this measure gives investors an additional perspective on cash flow from operating activities in excess of amounts required for reinvestment. It also provides a measure of our ability to repay our debt obligations.
Net leverage
Net leverage is a performance measure that we believe provides investors a more complete understanding of our leverage position and borrowing capacity after factoring in cash and cash equivalents that eventually could be used to repay outstanding debt. We define net leverage as net debt (total debt less cash and cash equivalents) divided by the trailing 12 months Adjusted EBITDA. A reconciliation of these non-GAAP financial measures and the most directly comparable measures calculated and presented in accordance with GAAP are set forth on the following tables:
American Woodmark (NYSE: AMWD) stock price history
The image below as obtained from Google shows the stock price history of American Woodmark over the past 5 years. And its been a pretty volatile but overall positive time for American Woodmark stock. 5 years ago the stock was trading at $39.90 and its currently trading at $103.08. That's a strong return of 158.4% provided to American Woodmark stockholders over the last 5 years.
The stock of American Woodmark is trading at a lot closer to its 52 week high of $108 than it is to its 52 week low of $53.35 which to us is a clear indication that the short term sentiment and momentum of American Woodmark's stock is very positive.
The stock of American Woodmark is trading at a lot closer to its 52 week high of $108 than it is to its 52 week low of $53.35 which to us is a clear indication that the short term sentiment and momentum of American Woodmark's stock is very positive.
Recent coverage of American Woodmark
The extract below covers the latest regarding American Woodmark as obtained from Zacks.com
American Woodmark (AMWD - Free Report) came out with quarterly earnings of $1.84 per share, beating the Zacks Consensus Estimate of $1.62 per share. This compares to earnings of $1.60 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 13.58%. A quarter ago, it was expected that this cabinet maker would post earnings of $1.93 per share when it actually produced earnings of $2.13, delivering a surprise of 10.36%.
Over the last four quarters, the company has surpassed consensus EPS estimates three times. American Woodmark, which belongs to the Zacks Furniture industry, posted revenues of $428.02 million for the quarter ended October 2019, surpassing the Zacks Consensus Estimate by 1.43%. This compares to year-ago revenues of $424.88 million. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
American Woodmark shares have added about 89.2% since the beginning of the year versus the S&P 500's gain of 25%.
Read the full article here
American Woodmark (AMWD - Free Report) came out with quarterly earnings of $1.84 per share, beating the Zacks Consensus Estimate of $1.62 per share. This compares to earnings of $1.60 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 13.58%. A quarter ago, it was expected that this cabinet maker would post earnings of $1.93 per share when it actually produced earnings of $2.13, delivering a surprise of 10.36%.
Over the last four quarters, the company has surpassed consensus EPS estimates three times. American Woodmark, which belongs to the Zacks Furniture industry, posted revenues of $428.02 million for the quarter ended October 2019, surpassing the Zacks Consensus Estimate by 1.43%. This compares to year-ago revenues of $424.88 million. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
American Woodmark shares have added about 89.2% since the beginning of the year versus the S&P 500's gain of 25%.
Read the full article here
American Woodmark's (NYSE: AMWD) latest stock valuation
So what do we value the stock of American Woodmark at based on their latest set of earnings report? Considering the news of a share buy back, their strong cash generation and moderate inventory and accounts receivable levels our valuation model provides a target (full value) price for American Woodmark at $114.20 a stock (up slightly from our 1st quarter 2020 earnings report of American Woodmark). We therefore believe the stock of American Woodmark is slightly undervalued
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which is $114.20 in this case. A good entry point into American Woodmark would therefore be at $102.80 or below. We expect the stock of American Woodmark to kick up slightly from current levels to levels closer to our target (full value) price.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which is $114.20 in this case. A good entry point into American Woodmark would therefore be at $102.80 or below. We expect the stock of American Woodmark to kick up slightly from current levels to levels closer to our target (full value) price.
Next earnings release of American Woodmark
It is expected that American Woodmark will release their 3rd quarter 2020 earnings report towards the end of February 2020