The manufactured building materials sector has admittedly seen some
poor performers over the last two years despite strong residential and
non-residential activity, but
JELD-WEN (
NYSE:JELD)
(“Jeld-Wen”) nevertheless stands out with particularly poor
performances on growth, margins, returns (ROIC, et al), and share price
performance. Double-digit
price
increases haven’t been enough to offset steep cost inflation, and now
the company is going into a period where underlying demand could well be
noticeably weaker. On top of all that, whenever the company names its
next permanent CEO, that will be the fourth such appointment in nine
years – not a mark of stability. When
shares of a company like Jeld-Wen look cheap, it’s fair to ask yourself
whether you’re underestimating just how tough things really or whether
the market has overreacted and left the stock for dead. In many cases
the answer can be “both”, and that could be the case here. I don’t feel
like forward revenue growth of 3% to 4% and free cash flow margins in
the 3% to 4% range are especially aggressive assumptions, but if pricing
normalizes, they could well prove too aggressive and whatever
undervaluation I see here could vanish quickly.
Read more here:
JELD-WEN Struggling Now And Demand Could Erode Further Next Year
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