What Happened?
Shares of composite decking and railing products manufacturer Trex Company (NYSE: TREX) jumped 4.5% in the morning session after it announced an expansion of its partnership with International Wood Products (IWP), a move set to bolster its distribution network and market presence in the Western U.S. The agreement expands its partnership with distributor International Wood Products (IWP), which will now exclusively stock Trex decking and railing at a new facility in Salt Lake City and across all six of its regional distribution centers. This strategic move strengthens Trex's foothold in the Western U.S. by increasing product accessibility and support for its sales channels. The company highlighted that the expansion reinforces its leadership position and supports ongoing growth in the Mountain Region, building on an already successful relationship with IWP in the Pacific Northwest and California.
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What Is The Market Telling Us
Trex’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 1 month ago when the stock gained 6.8% on the news that analysts at Baird upgraded the stock. The investment firm raised its rating on the composite decking manufacturer to "Outperform" from "Neutral" and boosted its price target to $75 from $65. Baird cited confidence in the company's stable sell-through trends, which refers to the rate at which its products are sold to end-customers by distributors. The analyst noted that while the stock has underperformed the broader market this year, its valuation is now attractive. Baird expects the company's earnings per share for 2025 to exceed the peak levels seen in 2021, supported by key growth initiatives like new products and market conversion from traditional wood decking.
Trex is down 5.6% since the beginning of the year, and at $64.40 per share, it is trading 19.4% below its 52-week high of $79.88 from December 2024. Investors who bought $1,000 worth of Trex’s shares 5 years ago would now be looking at an investment worth $899.35.
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