Trex has underperformed the S&P 500 over the past six months, returning just 0.6% while the index gained 8.7%, and analysts at StockStory recommend avoiding the stock. The firm cites three concerns: Trex's revenue grew at a tepid 4.9% compounded annual growth rate over the last five years, its free cash flow margin dropped by 8 percentage points over the same period to 19.2%, and its return on invested capital has significantly declined. With shares trading at 25.3 times forward earnings, or $44.00, the analysts believe too much good news is priced in and point to better opportunities elsewhere.
Trex Company IncAnalysts recommend selling due to weak revenue growth, declining free cash flow margin, and falling ROIC; shares are considered overvalued.