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Head to Head Review: Valmont Industries (NYSE:VMI) vs. Trex (TREX)

Trex (NYSE: TREX) and Valmont Industries (NYSE:VMI) are both mid-cap construction companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, institutional ownership, risk, valuation, profitabiliy and analyst recommendations. Dividends

Valmont Industries pays an annual dividend of £1.50 per share and has a dividend yield of 1.0%.

Trex does not pay a dividend. Valmont Industries pays out 18.6% of its earnings in the form of a dividend.

Volatility and Risk Trex has a beta of 2.36, suggesting that its share price is 136% more volatile than the S&P 500.

Comparatively, Valmont Industries has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500. Profitability This table compares Trex and Valmont Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Trex 15.12% 56.76% 33.15%
Valmont Industries 6.94% 14.89% 6.29%

Earnings & Valuation

This table compares Trex and Valmont Industries’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Trex £504.24 million 4.61 £131.61 million £2.58 30.66
Valmont Industries £2.64 billion 1.29 £344.67 million £8.07 18.74

Valmont Industries has higher revenue and earnings than Trex. Valmont Industries is trading at a lower price-to-earnings ratio than Trex, indicating that it is currently the more affordable of the two stocks. Analyst Recommendations

This is a summary of current recommendations and price targets for Trex and Valmont Industries, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Trex 0 3 2 0 2.40
Valmont Industries 0 2 1 0 2.33

Trex presently has a consensus price target of £71.75, indicating a potential downside of 9.29%. Valmont Industries has a consensus price target of £171.00, indicating a potential upside of 13.10%. Given Valmont Industries’ higher probable upside, analysts plainly believe Valmont Industries is more favorable than Trex.

Insider and Institutional Ownership

92.2% of Trex shares are owned by institutional investors. Comparatively, 85.0% of Valmont Industries shares are owned by institutional investors.

1.0% of Trex shares are owned by insiders. Comparatively, 3.3% of Valmont Industries shares are owned by insiders.

Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth. Summary Trex beats Valmont Industries on 10 of the 16 factors compared between the two stocks.

About Trex Trex logoTrex Company, Inc. is a manufacturer of wood-alternative decking and railing products. The Company’s products are marketed under the brand name Trex and are manufactured in the United States.

It offers a set of outdoor living products in the decking, railing, porch, fencing, trim, steel deck framing and outdoor lighting categories. Its decking products include Trex Transcend, Trex Enhance and Trex Select. The Company’s railing products include Trex Transcend Railing, Trex Select Railing and Trex Signature aluminum railing.

It offers Trex Transcend Porch Flooring and Railing System, which is an integrated system of porch components and accessories. The Company offers Trex Seclusions fencing product, which consists of structural posts, bottom rail, pickets, top rail and decorative post caps. It offers a triple-coated steel deck framing system called Trex Elevations.

The Company also offers outdoor lighting systems, such as Trex DeckLighting and Trex Landscape Lighting. About Valmont Industries Valmont Industries logoValmont Industries, Inc. is a producer of fabricated metal products, and steel, aluminum and composite pole, tower and other structures, and mechanized irrigation systems.

The Company’s segments are Engineered Support Structures (ESS); Utility Support Structures; Energy and Mining; Coatings; Irrigation, and Other. The ESS segment manufactures steel, aluminum, and composite poles and structures. The Utility Support Structures Segment manufactures steel and concrete pole structures for electrical transmission, substation and distribution applications.

The Energy and Mining Segment produces access systems, which are engineered structures and components that allow people to move safely in an industrial, infrastructure or commercial facility.

The Coatings Segment consists of galvanizing, anodizing and powder coating services on a global basis.

The Irrigation Segment manufactures and distributes mechanical irrigation equipment and related service parts under the Valley brand name.

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References

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