The Gory Details on Trex's Double Miss

Seth Jayson, The Motley Fool
Updated

Trex (NYS: TREX) reported earnings on Feb. 27. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Trex missed estimates on both revenue and earnings per share.

Compared to the prior-year quarter, revenue dropped significantly, and GAAP loss per share expanded.

Margins dropped across the board.

Revenue details
Trex booked revenue of $51.5 million. The seven analysts polled by S&P Capital IQ hoped for revenue of $53.4 million on the same basis. GAAP reported sales were 32% lower than the prior-year quarter's $75.3 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at -$0.54. The seven earnings estimates compiled by S&P Capital IQ averaged -$0.40 per share on the same basis. GAAP EPS were -$1.18 for Q4 compared to -$0.15 per share for the prior-year quarter.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was -2.0%, 2,420 basis points worse than the prior-year quarter. Operating margin was -28.5%, 3,020 basis points worse than the prior-year quarter. Net margin was -35.5%, 3,240 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $86.1 million. On the bottom line, the average EPS estimate is $0.43.

Next year's average estimate for revenue is $312.2 million. The average EPS estimate is $1.28.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 77 members rating the stock outperform and 51 members rating it underperform. Among 44 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 21 give Trex a green thumbs-up, and 23 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Trex is outperform, with an average price target of $25.57.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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