Today's Strong And Under The Radar Stock: Armstrong World Industries (AWI)

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.

Trade-Ideas LLC identified Armstrong World Industries ( AWI) as a strong and under the radar 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 $37.1 million.
  • AWI is making at least a new 3-day high.
  • AWI has a PE ratio of 35.4.
  • AWI is mentioned 1.03 times per day on StockTwits.
  • AWI has not yet been mentioned on StockTwits today.
  • AWI is currently in the upper 20% of its 1-year range.
  • AWI is in the upper 35% of its 20-day range.
  • AWI is in the upper 45% of its 5-day range.
  • AWI is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on AWI:

Armstrong World Industries, Inc. designs, manufactures, and sells flooring products and ceiling systems worldwide. AWI has a PE ratio of 35.4. Currently there are 3 analysts that rate Armstrong World Industries a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Armstrong World Industries has been 718,700 shares per day over the past 30 days. Armstrong World has a market cap of $3.1 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 0.86 and a short float of 13.1% with 7.04 days to cover. Shares are up 8.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Armstrong World Industries as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, poor profit margins and disappointing return on equity.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Building Products industry. The net income increased by 175.7% when compared to the same quarter one year prior, rising from $16.90 million to $46.60 million.
  • ARMSTRONG WORLD INDUSTRIES has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 increased its bottom line by earning $1.83 versus $1.70 in the prior year. This year, the market expects an improvement in earnings ($2.27 versus $1.83).
  • The gross profit margin for ARMSTRONG WORLD INDUSTRIES is currently lower than what is desirable, coming in at 28.65%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 8.45% is above that of the industry average.
  • Net operating cash flow has declined marginally to -$34.10 million or 3.64% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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