![]() ![]() What’s giving Trex that extra firepower is the shrinking price gap with wood. ![]() Even so, Trex was already advancing on the rivals offering those pressure-treated planks harvested from trees. Traditionally, consumers were willing to pay a lot more for composite than lumber, chiefly because the former is more durable, lasting well past 25 years versus ten to fifteen for wood. “Every point we take from wood means an extra $50 million or some 5% in sales for Trex,” observes Fairbanks. Now, Fairbanks expects composite to grab an remarkable extra two points more this year, raising its slice to almost one-quarter. That enabled the recycling-forged extensions to raise their market share in that half-decade from around 17% to 22%. In the five years through the close of 2019, sales of composite decks grew at double the 7% to 8% pace of the overall market. “We’ve been growing much faster since the crisis began by taking lots of market share from wood.” He notes that pre-COVID, composite was already gaining on lumber. “We can sell as much as we can make,” says Fairbanks. Its factories are still operating at maximum capacity. Virginia and Nevada, the states where its plants are located, deemed construction materials an essential industry. An essential industryĭuring the dark days of the pandemic, Trex was free to keep producing at full tilt. The reason: Wall Street’s awarded Trex a vertiginous price-to-earnings multiple of sixty-one, meaning investors expect go-go growth in the years to come. It now boasts an $11.2 billion valuation––a number that’s astounding for Trex’s modest size. Trex is virtually the only one in the first twenty-five that manufactures a final product that isn’t apparel in its own factories. The other top performers are mainly young electronics and healthcare players. That record is the 24th highest in the S&P 1000. Over the past five years, Trex’s shares have vaulted from $11 to $97 delivering a 767% total return. Last year, its revenues vaulted 18% to $881 million, followed in Q1 by a 23% year-over-year jump, and for Q2, CEO Bryan Fairbanks forecasts a gain of 36%. It’s been posting numbers more typical of a software or biotech star than an old-line manufacturer. Trex, a three-decade-old Virginia stalwart, controls half the composite market, a share twice that of its closest competitor. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |