American Woodmark: Zacks’ Bull of the Day Play

American Woodmark Corporation (AMWDSnapshot Report) continues to post earnings beats and strong sales as American consumers are in the home remodeling mood. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by the double digits in fiscal 2016.

American Woodmark makes kitchen cabinets and vanities for the remodeling and home construction markets. Its American Woodmark cabinetry is sold at Home Depot.

Its Shenandoah Cabinetry is sold through Lowe’s. It’s other brands are sold at specialty kitchen stores and distributors. It operates 9 manufacturing facilities and 7 distribution centers throughout the United States.

Another Big Beat in the Fiscal Third Quarter

On Feb 25, American Woodmark reported its fiscal third quarter results and blew by the Zacks Consensus Estimate. earnings were $0.73 compared to the consensus of $0.53.

It has put together an impressive earnings surprise record. That was the 7th consecutive beat.

Sales rose 16% to $218.6 million compared to the year ago period. It saw growth in all channels in the quarter.

Gross profit rose to 20.4% from 18.6% in the third quarter of the prior year. It was favorably impacted by higher sales volume and improved operating efficiency.

Estimates Rise

No one should have been surprised by the results. Home Depot said earlier in February that it saw strong sales in its kitchen division.

2 estimates for full year 2016 were raised after the earnings report.

The Zacks Consensus Estimate jumped to $3.58 from $3.36.

Analysts are also bullish that the good times will last. They raised fiscal 2017 estimates as well, pushing the 2017 Zacks Consensus Estimate up to $4.09 from $3.90. That is another 14.4% earnings growth.

Shares Have Pulled Back

Shares had been on a tear until late 2015. Like a lot of stocks, it fell in 2016.

It’s cheaper than it has been with a forward P/E of 19.1 but that’s still not exactly a value stock.

But investors are clearly in this for its double digit earnings growth.

If you’re looking for a way to play the hot home remodeling market, American Woodmark is one to keep on the short list.

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Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec and she also hosts the Zacks Market Edge Podcast on iTunes.


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