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Armstrong World Industries (AWI) Is Today's Storm The Castle Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Armstrong World Industries ( AWI) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Armstrong World Industries as such a stock due to the following factors:

  • AWI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $54.6 million.
  • AWI has traded 930,685 shares today.
  • AWI is trading at 3.04 times the normal volume for the stock at this time of day.
  • AWI crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize on. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in AWI with the Ticky from Trade-Ideas. See the FREE profile for AWI NOW at Trade-Ideas

More details on AWI:

Armstrong World Industries, Inc. designs, manufactures, and sells flooring products and ceiling systems worldwide. AWI has a PE ratio of 33.0. Currently there are 6 analysts that rate Armstrong World Industries a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Armstrong World Industries has been 1.1 million shares per day over the past 30 days. Armstrong World has a market cap of $2.9 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.25 and a short float of 9.4% with 1.90 days to cover. Shares are down 7.9% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Armstrong World Industries as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 3.7%. Since the same quarter one year prior, revenues slightly increased by 7.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ARMSTRONG WORLD INDUSTRIES has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ARMSTRONG WORLD INDUSTRIES reported lower earnings of $1.70 versus $2.41 in the prior year. This year, the market expects an improvement in earnings ($2.68 versus $1.70).
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Building Products industry average. The net income increased by 28.6% when compared to the same quarter one year prior, rising from $8.40 million to $10.80 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Building Products industry and the overall market, ARMSTRONG WORLD INDUSTRIES's return on equity exceeds that of both the industry average and the S&P 500.
  • In its most recent trading session, AWI has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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