Armstrong World Industries (NYSE:AWI) is good at what it does - it is the market leader in commercial ceilings in North America, at/near the top in Europe, and posts strong margins - but it isn't always enough to be good at what you do. Although Armstrong has seen a recovery in some key end-markets like office construction, trends in education and healthcare have been weaker and the renovation/remodel market hasn't really perked up.
Armstrong could be a beneficiary of a lower tax rate, and the company's long-term efforts to improve its share in specialty ceilings are sound, but near-term risks like higher input costs and slowing end-market activity shouldn't be ignored given an already-healthy valuation based on cash flow and EBITDA.
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Armstrong World Industries Could Use A Little More Head Room