Trex Company manufactures and distributes wood/plastic composite products, and related accessories primarily for the residential and commercial decking, and railing applications in the United States. The company was founded in 1996 and is based in Winchester, Virginia.
TREX Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for TREX, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Trex Co Inc ranked in the 36th percentile in terms of potential gain offered. Our DCF analysis suggests the stock is overvalued by about 46%. The most interesting components of our discounted cash flow analysis for Trex Co Inc ended up being:
The stock's equity weight, or the proportion of capital from equity relative to debt, is 99. Notably, its equity weight is greater than 93.77% of US equities in the Basic Materials sector yielding a positive free cash flow.
The business' balance sheet suggests that 1% of the company's capital is sourced from debt; this is greater than only 5.11% of the free cash flow producing stocks we're observing.
Trex Co Inc's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at -125.22. This coverage rate is greater than that of just 1.59% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
UFS, OEC, MAS, PPG, and RPM can be thought of as valuation peers to TREX, in the sense that they are in the Basic Materials sector and have a similar price forecast based on DCF valuation.