Trex Co Inc (NYSE: TREX)

Sector: Industrials Industry: Building Products & Equipment CIK: 0001069878
Market Cap 4.55 Bn
P/B 4.37
P/E 23.02
P/S 3.86
ROIC (Qtr) 16.13
Div Yield % 0.00
Rev 1y % (Qtr) 22.09
Total Debt (Qtr) 147.01 Mn
Debt/Equity (Qtr) 0.14
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About

Investment thesis

Bull case

  • Strong operating cash flow of 284.15M provides robust 1.93x coverage of total debt 147.01M, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 284.15M provides exceptional 3738.87x coverage of interest expenses 76000, showing strong debt service capability.
  • Strong tangible asset base of 1.42B provides 9.67x coverage of total debt 147.01M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 284.15M provides strong 30.13x coverage of stock compensation 9.43M, indicating sustainable incentive practices.
  • Operating cash flow of 284.15M provides solid 1.01x coverage of current liabilities 282.18M, showing strong operational health.

Bear case

  • Operating cash flow of 284.15M barely covers its investment activities of (273.30M), with a coverage ratio of -1.04, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 11.36M against inventory of 149.55M, the 0.08 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Free cash flow of 23.44M provides weak coverage of capital expenditures of 260.71M, with a 0.09 ratio suggesting additional external financing needs for growth initiatives.
  • Cash position of 11.36M provides weak coverage of payables of 47.46M, which is 0.24x, indicating potential working capital stress and supplier relationship risks.
  • Operating cash flow of 284.15M is outpaced by equity issuance of (54.32M) (-5.23 ratio), indicating concerning reliance on equity markets for funding operations.

Financing Receivable Portfolio Segment Breakdown of Revenue (2024)

Financing Receivable Portfolio Segment Breakdown of Revenue (2024)

Peer comparison

Companies in the Building Products & Equipment
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 TT Trane Technologies plc 104.89 Bn 35.94 4.92 4.62 Bn
2 JCI Johnson Controls International plc 91.64 Bn 26.98 3.82 9.71 Bn
3 CARR CARRIER GLOBAL Corp 56.66 Bn 38.18 2.61 12.25 Bn
4 LII Lennox International Inc 19.91 Bn 24.71 3.83 1.77 Bn
5 CSL Carlisle Companies Inc 17.50 Bn 23.63 3.49 2.88 Bn
6 MAS Masco Corp /De/ 15.94 Bn 19.68 2.11 3.17 Bn
7 OC Owens Corning 13.83 Bn 13.90 1.63 5.61 Bn
8 WMS Advanced Drainage Systems, Inc. 13.26 Bn 28.18 4.44 1.45 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.33 2.00
EV to Cash from Ops. EV/CFO 17.01 13.48
EV to Debt EV to Debt 32.87 10.94
EV to EBIT EV/EBIT 17.90 24.16
EV to EBITDA EV/EBITDA 14.67 -11.14
EV to Free Cash Flow [EV/FCF] EV/FCF 206.14 46.78
EV to Market Cap EV to Market Cap 1.06 1.12
EV to Revenue EV/Rev 4.09 2.81
Price to Book Value [P/B] P/B 4.37 4.24
Price to Earnings [P/E] P/E 23.02 47.40
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.80
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 11.22
Dividend per Basic Share Div per Share (Qtr) 0.00 0.71
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 10.90
Interest Coverage Int. cover (Qtr) 3,552.50 111.58
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -27.46 -24.93
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -11.54 61.26
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.67
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -16.37 -186.82
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -11.58 -57.93
EBIT Growth (1y) % EBIT 1y % (Qtr) -15.19 -102.26
EBT Growth (1y) % EBT 1y % (Qtr) -15.89 -299.15
EPS Growth (1y) % EPS 1y % (Qtr) -15.98 -598.34
FCF Growth (1y) % FCF 1y % (Qtr) -52.21 89.70
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -7.08 -3.62
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.81 0.88
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.13
Cash Ratio Cash Ratio (Qtr) 0.04 1.57
Current Ratio Curr Ratio (Qtr) 1.20 3.42
Debt to Equity Ratio Debt/Equity (Qtr) 0.14 0.79
Interest Cover Ratio Int Coverage (Qtr) 3,552.50 111.58
Times Interest Earned Times Interest Earned (Qtr) 3,552.50 111.58
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 27.90 3.54
EBIT Margin % EBIT Margin % (Qtr) 22.87 1.23
EBT Margin % EBT Margin % (Qtr) 22.86 -1.76
Gross Margin % Gross Margin % (Qtr) 39.50 28.65
Net Profit Margin % Net Margin % (Qtr) 16.80 -3.80