Trex Company (TREX) AI Stock Analysis

• Market Cap: $5.24B
• Dividend Yield: N/A
• Average Volume (3M): 1.84M
• Price to Earnings (P/E): 28.6
• Beta (1Y): 1.26
• Revenue Growth: -9.65%
• EPS Growth: -28.30%
• Country: US
• Employees: 1,838
• Sector: Industrials
• Sector Strength: 72
• Industry: Construction
• EPS (TTM): 0.73
• Shares Outstanding: 107,234,320
• 10 Day Avg. Volume: 1,705,458
• 30 Day Avg. Volume: 1,837,647
• PEG Ratio: 3.12
• Price to Book (P/B): 8.78
• Price to Sales (P/S): 6.49
• P/FCF Ratio: -80.56
• Enterprise Value/Market Cap: 1.17
• Enterprise Value/Revenue: 5.42
• Enterprise Value/Gross Profit: 13.80
• Enterprise Value/Ebitda: 19.69
• 1Y Price Target: $68.32
• Price Target Upside: 35.66% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14

• Rating: 64 Neutral
• Price Target: $58.00 ▲(15.17% Upside)

Trex Company has a solid financial foundation with strong profitability and a robust balance sheet. However, technical indicators suggest bearish momentum, and valuation metrics indicate the stock may be overvalued. The mixed sentiment from the earnings call, with positive sales growth but declining margins, further influences the overall score.

Positive Factors

Strong Product Demand

The increased contribution from new products indicates successful innovation and market acceptance, supporting long-term revenue growth and competitive positioning.

Operational Efficiency

The new facility enhances production efficiency and cost control, strengthening Trex's supply chain and supporting sustainable margin improvement.

Market Share Expansion

Gaining market share in wood alternatives reflects Trex's competitive advantage and positions the company for continued growth in a key segment.

Negative Factors

Gross Margin Decline

The decline in gross margin due to strategic investments and lower production could pressure profitability if not offset by revenue growth or cost efficiencies.

Net Income Decrease

A decrease in net income suggests challenges in maintaining profitability, which could impact financial flexibility and investor confidence if persistent.

Cash Flow Challenges

Challenges in cash flow generation may limit Trex's ability to invest in growth opportunities and manage financial obligations effectively.

Trex Company Business Overview & Revenue Model

Company Description

Trex Company, Inc. manufactures and distributes decking, railing, and outdoor living products and accessories for residential and commercial markets in the United States. The company operates in two segments, Trex Residential and Trex Commercial. It offers decking products under the names Trex Transcend, Trex Select, and Trex Enhance for protection against fading, staining, mold, and scratching; Trex Hideaway, a hidden fastening system; and Trex DeckLighting, a LED dimmable deck lighting for use on posts, floors, and steps. The company also provides Trex Transcend Railing products that are used in Trex decking products and other decking materials; Trex Select Railing products for a simple clean finished look; Trex Enhance Railing system; and Trex Signature aluminum railing for a contemporary look. In addition, it offers Trex Seclusions, a fencing product that includes structural posts, bottom and top rails, pickets, and decorative post caps. In addition, it designs, engineers, and markets architectural and aluminum railing systems, and staging equipment and accessories for the commercial market, as well as sports stadiums and performing arts venues. Further, the company acts as a licensor in various licensing agreements with third parties to manufacture and sell products under the Trex name, including Trex Outdoor Furniture; Trex RainEscape, an above joist deck drainage system; Trex Pergola, a cellular PVC product; Trex Latticeworks outdoor lattice boards; Trex Cornhole boards; Diablo Trex Blade, a saw blade for wood-alternative composite decking; Trex SpiralStairs and structural steel posts; and Trex Outdoor Kitchens, Cabinetry, and Storage products. It sells its products through wholesale distributors, retail lumber dealers, and Home Depot and Lowe's stores, as well as through its direct sales staff, independent sales representatives, and bidding on projects. Trex Company, Inc. was founded in 1996 and is headquartered in Winchester, Virginia.

How the Company Makes Money

Trex generates revenue primarily through the sale of its composite decking products, railing systems, and other outdoor living accessories. The company's revenue model is largely driven by direct sales to consumers, contractors, and distributors. Key revenue streams include residential decking, which constitutes a significant portion of sales, and commercial projects that utilize Trex products for larger installations. Additionally, Trex benefits from strong brand recognition and loyalty, which is bolstered by its focus on sustainability and innovative product design. The company also engages in partnerships with retailers and distributors to expand its market reach. Seasonal demand, particularly in the spring and summer months, along with strategic marketing initiatives and product diversification, further contribute to its earnings.

Trex Company Financial Statement Overview

Summary

Trex Company demonstrates strong profitability with a healthy net profit margin and a solid balance sheet with low leverage. However, the slowdown in revenue growth and challenges in cash flow generation could pose risks if not addressed.

Income Statement

Trex Company shows a stable revenue base with a slight decline in the TTM period. The gross profit margin is healthy at 39.3% TTM, although it has decreased from the previous year. Net profit margin is strong at 16.5% TTM, indicating effective cost management. However, the revenue growth rate has slowed significantly, which could be a concern if it continues.

Balance Sheet

The balance sheet reflects a solid financial position with a low debt-to-equity ratio of 0.29 TTM, indicating conservative leverage. The return on equity is robust at 20.5% TTM, showcasing efficient use of equity. The equity ratio is strong, suggesting a stable asset base.

Cash Flow

Cash flow analysis reveals challenges, with a significant decline in free cash flow growth. The operating cash flow to net income ratio is moderate at 0.52 TTM, suggesting room for improvement in cash generation relative to earnings. The free cash flow to net income ratio is low, indicating potential liquidity concerns.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.13B	1.15B	1.09B	1.11B	1.20B	880.83M
Gross Profit	443.81M	485.67M	452.41M	403.99M	460.50M	359.46M
EBITDA	310.94M	360.34M	326.39M	306.46M	356.83M	251.57M
Net Income	186.67M	226.39M	205.38M	184.63M	208.74M	175.63M
Balance Sheet
Total Assets	1.54B	1.32B	932.88M	933.71M	920.32M	770.49M
Cash, Cash Equivalents and Short-Term Investments	5.52M	1.29M	1.96M	12.32M	141.05M	121.70M
Total Debt	294.47M	255.38M	32.00M	253.46M	35.33M	35.29M
Total Liabilities	548.60M	474.16M	216.21M	415.36M	195.29M	181.96M
Stockholders Equity	989.26M	850.14M	716.67M	518.35M	725.03M	588.53M
Cash Flow
Free Cash Flow	-74.59M	-92.71M	223.33M	39.99M	98.67M	14.47M
Operating Cash Flow	220.03M	143.93M	389.42M	216.22M	258.06M	187.29M
Investing Cash Flow	-294.43M	-236.53M	-166.09M	-168.88M	-158.04M	-170.66M
Financing Cash Flow	78.75M	91.94M	-233.70M	-176.06M	-80.67M	-43.77M

Trex Company Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 50.36
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TREX, the sentiment is Negative. The current price of 50.36 is below the 20-day moving average (MA) of 51.36, below the 50-day MA of 55.72, and below the 200-day MA of 59.66, indicating a bearish trend. The MACD of -1.52 indicates Negative momentum. The RSI at 42.12 is Neutral, neither overbought nor oversold. The STOCH value of 24.75 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TREX.

Trex Company Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SSD	―	$7.76B	22.67	17.82%	0.65%	4.26%	8.52%
WMS	―	$10.97B	25.46	27.68%	0.48%	0.24%	-12.68%
AWI	―	$8.37B	27.72	38.03%	0.61%	15.10%	23.35%
AAON	―	$8.43B	70.45	15.52%	0.36%	5.39%	-34.28%
FBIN	―	$6.15B	16.11	16.84%	1.93%	-5.79%	-9.90%
TREX	―	$5.24B	28.65	19.81%	―	-9.65%	-28.30%
Sector *	―	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Trex Company Corporate Events

Trex Company Appoints New CFO Prithvi S. Gandhi

Trex Company announced the appointment of Prithvi S. Gandhi as Senior Vice President and Chief Financial Officer, effective October 6, 2025. Mr. Gandhi brings over 25 years of financial leadership experience across various sectors, including building products and manufacturing. His previous roles include Executive Vice President and CFO of Beacon Roofing Supply and Vice President and CFO of TAMKO Building Products, where he led financial performance improvements and the entry into sustainable products. This strategic appointment is expected to enhance Trex’s financial strategies and strengthen its market leadership as the company continues to execute its long-term strategy and create sustainable value for shareholders.

The most recent analyst rating on (TREX) stock is a Buy with a $72.00 price target. To see the full list of analyst forecasts on Trex Company stock, see the TREX Stock Forecast page.

Trex Company Reports Mixed Earnings with Record Sales

The recent earnings call of Trex Company painted a mixed picture for investors. While the company celebrated record sales and significant strides in product innovation, it also faced challenges such as declining gross margins, net income, and year-to-date net sales, exacerbated by adverse weather conditions. Despite these hurdles, Trex demonstrated resilience through strategic expansion and production initiatives.

Trex Company Surpasses Q2 Guidance with Strong Sales

Trex Company, Inc., headquartered in Winchester, Virginia, is the world’s leading manufacturer of wood-alternative decking and railing, specializing in high-performance, low-maintenance outdoor living products. The company has established itself as a pioneer in the composite decking category, offering a wide range of outdoor living solutions through a robust distribution network across six continents.