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Category: Stock Market and Amstrong Flooring
Date: 20 September 2019 Stock Price: $6.88 We take a look at the 2nd quarter earnings release of their 2019 fiscal year of Armstrong Floor Inc a designer and manufacturer of flooring solutions.
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About Armstrong Flooring Inc
Armstrong Flooring, Inc. is a global leader in the design and manufacture of innovative flooring solutions. Headquartered in Lancaster, Pennsylvania, Armstrong Flooring is North America's largest producer of resilient flooring products.
Overview of Armstrong Flooring Inc's latest earnings report
The numbers we are interested in (for the quarter):
- Sales: $177.7 million (down from $201.2million from the same quarter of the previous year)
- Sales decreased by -11.6% over the last 12 months
- Cost of goods sold: $141.5 million (down from $157.5 million for the same quarter of the previous year)
- Cost of goods sold decreased by -10.1% over the last 12 months
- Net earnings: $14.7 million (up from $10.5 million for the same quarter of the previous year)
- Diluted income per share: $0.56 (up from $0.40 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 26.1 million (up from 26 million for the same quarter of the previous year)
- Cash and cash equivalents: $45.5 million
- Cash and cash equivalents per share: $1.74
- Cash and cash equivalents makes up 25.3% of Armstrong Flooring's market capital
- Cash and cash equivalents makes up 7.59% of Armstrong Flooring's total assets
- Inventories: $136 million
- Inventories makes up 22.68% of Armstrong Flooring's total assets
- Accounts receivable: $65.9 million
- Accounts receivable makes up 10.99% of Armstrong Flooring's total assets
- Stockholders equity of Armstrong Flooring: $339.5 million
- Stockholders equity per share: $13
- Armstrong Flooring restaurants is trading at 0.52 times its stockholders equity per share. It is odd for firms to trade at values well below their stockholder equity per share, as most firms tend to trade at levels between 2 and 4 times its stated stockholders equity per share.
Armstrong Flooring Inc's management commentary on the results and earnings guidance
LANCASTER, Pa.--(BUSINESS WIRE)-- Armstrong Flooring, Inc. (NYSE: AFI) (“Armstrong Flooring” or the “Company”), North America’s largest producer of resilient flooring products, today reported financial results for the second quarter ended June 30, 2019.
Larry McWilliams, Chairman and Interim Chief Executive Officer, commented, “Adjusted EBITDA margin improved in the quarter despite challenging end market demand across our industry, including the winding down of elevated channel inventory levels. We remain committed to investing in our products, people and operations to improve our position with customers. The strength of our balance sheet provides us with the flexibility to continue executing against that objective while capitalizing on value enhancing opportunities.”
Second Quarter 2019 Highlights
Full Year 2019 Outlook
For the full year 2019, the Company has moderated its expectation for adjusted EBITDA, which it now anticipates to be in the range of $46 million to $54 million, primarily attributable to a continuation of soft end-market conditions. The Company continues to expect capital expenditures to be approximately $30 million for the full year 2019. The Company expects to build cash from operations over the remaining quarters of 2019.
Larry McWilliams, Chairman and Interim Chief Executive Officer, commented, “Adjusted EBITDA margin improved in the quarter despite challenging end market demand across our industry, including the winding down of elevated channel inventory levels. We remain committed to investing in our products, people and operations to improve our position with customers. The strength of our balance sheet provides us with the flexibility to continue executing against that objective while capitalizing on value enhancing opportunities.”
Second Quarter 2019 Highlights
- Net Sales of $177.7 Million
- Net Income of $14.7 Million and Adjusted Net Income of $9.4 Million
- Adjusted EBITDA of $20.0 Million
- Repurchased 4.5 Million Shares for Approximately $50 Million
- Updates Full Year 2019 Outlook
Full Year 2019 Outlook
For the full year 2019, the Company has moderated its expectation for adjusted EBITDA, which it now anticipates to be in the range of $46 million to $54 million, primarily attributable to a continuation of soft end-market conditions. The Company continues to expect capital expenditures to be approximately $30 million for the full year 2019. The Company expects to build cash from operations over the remaining quarters of 2019.
Armstrong Flooring Inc. (NYSE:AFI) stock price history
The image below, obtained from Google, shows the stock price history of Armstrong Flooring Inc. (NYSE: AFI) since its listing. And it has not been a very good time for Armstrong Flooring In. At its listing date it was trading around $13.30 and its currently trading at $6.88 That's a strong decline of -48.2% since early 2016. The stock is at least trading at closer to its 52 week low than it is to its 52 week high, which to us is a clear indication that the short term momentum and sentiment towards Hibbett Sports is very negative.
Armstrong Flooring Inc (NYSE: AFI) latest stock valuation
So based on the earnings report of Armstrong Flooring (NYSE:AFI) and the latest earnings guidance provided what do we value Armstrong flooring (AFI) stock at? Based on this the group our target (full value) price for Armstrong Flooring at $17.80 a stock. We therefore believe the stock of Armstrong Flooring (AFI) is undervalued
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $17.80 Therefore we believe the a good entry point into the stock is below $16. We therefore rate Armstrong flooring as a buy and we believe that it will tick upwards to levels closer to our target (full value) price in coming weeks and months
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $17.80 Therefore we believe the a good entry point into the stock is below $16. We therefore rate Armstrong flooring as a buy and we believe that it will tick upwards to levels closer to our target (full value) price in coming weeks and months