Friday, November 5, 2010

Monster Jump Out of Armstrong World Industries (AWI)

Aside: I am not chasing anything today as the market is pulled very far from its 13 day moving average.  If anything if S&P 1220 is broken to the downside, I'd like to do an intraday index short.

Monday, I mentioned the breakout happening in Armstrong World Industries (AWI) [Nov 1, 2010: Keeping an Eye on Armstrong World Industries] but did not want to jump in ahead of earnings.  The technical breakout continued all week, and last night's earnings caused a massive jump this morning, although the stock is giving quite a bit back already.  However, it does strike me as *interesting* in terms of "information leak" to watch how the stock moved ....

The results aren't 'great' by any means, but since they beat analysts expectations by a wide margin with a small increase in guidance and the stock was range bound for months, that was all it took.  While I like to buy breakouts, I prefer it to be in companies with business that is either very good secularly, or improving dramatically on a cyclical basis.   This is sort of a "meh" type of fundamental story...

  • Armstrong World Industries Inc (AWI) posted better-than-expected quarterly profit, helped by growth at its building products segment, and raised its full-year earnings outlook.
  • Armstrong World, which makes flooring products, ceiling systems and kitchen and bathroom cabinets, now expects 2010 adjusted earnings of $1.69-$1.79 per share, up from its prior view of $1.55-$1.75 per share.
  • The company also narrowed its 2010 sales outlook to $2.76-$2.80 billion, from its previous outlook of $2.70-$2.85 billion.
  • The building products segment grew 6 percent and contributed about 42 percent to sales. Higher margins at the segment helped growth.
  • All other segments saw a decline in sales.
  • For the July-September quarter, the company reported net income of $24.6 million, or 42 cents a share, compared with $64.4 million, or $1.12 cents a share, a year ago. Excluding items, the company earned 83 cents a share.
  • Net sales fell about 2 percent to $739.8 million. Analysts on an average were expecting earnings of 64 cents a share on revenue of $761.1 million..
No position


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