Overall TREX gets a fundamental rating of 4 out of 10. We evaluated TREX against 42 industry peers in the Building Products industry. TREX has an excellent profitability rating, but there are some minor concerns on its financial health. TREX has a expensive valuation and it also scores bad on growth.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year TREX was profitable.
In the past year TREX had a positive cash flow from operations.
In the past 5 years TREX has always been profitable.
TREX had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

TREX's Return On Assets of 13.62% is amongst the best of the industry. TREX outperforms 83.33% of its industry peers.
TREX has a Return On Equity of 18.98%. This is in the better half of the industry: TREX outperforms 69.05% of its industry peers.
TREX's Return On Invested Capital of 16.07% is amongst the best of the industry. TREX outperforms 80.95% of its industry peers.
TREX had an Average Return On Invested Capital over the past 3 years of 21.94%. This is significantly above the industry average of 12.68%.
The last Return On Invested Capital (16.07%) for TREX is well below the 3 year average (21.94%), which needs to be investigated, but indicates that TREX had better years and this may not be a problem.

		Industry Rank	Sector Rank
ROA	13.62%
ROE	18.98%
ROIC	16.07%

ROA(3y)19.63%

ROA(5y)20.87%

ROE(3y)30.3%

ROE(5y)29.91%

ROIC(3y)21.94%

ROIC(5y)24.11%

1.3 Margins

TREX has a Profit Margin of 16.76%. This is amongst the best in the industry. TREX outperforms 90.48% of its industry peers.
TREX's Profit Margin has been stable in the last couple of years.
TREX's Operating Margin of 23.50% is amongst the best of the industry. TREX outperforms 97.62% of its industry peers.
In the last couple of years the Operating Margin of TREX has remained more or less at the same level.
TREX has a better Gross Margin (39.69%) than 76.19% of its industry peers.
In the last couple of years the Gross Margin of TREX has remained more or less at the same level.

		Industry Rank	Sector Rank
OM	23.5%
PM (TTM)	16.76%
GM	39.69%

OM growth 3Y-0.33%

OM growth 5Y1.01%

PM growth 3Y4.08%

PM growth 5Y0.25%

GM growth 3Y3.11%

GM growth 5Y0.51%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

TREX has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
TREX has less shares outstanding than it did 1 year ago.
TREX has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, TREX has a worse debt to assets ratio.

2.2 Solvency

TREX has an Altman-Z score of 9.86. This indicates that TREX is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 9.86, TREX belongs to the best of the industry, outperforming 95.24% of the companies in the same industry.
The Debt to FCF ratio of TREX is 10.60, which is on the high side as it means it would take TREX, 10.60 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of TREX (10.60) is worse than 66.67% of its industry peers.
A Debt/Equity ratio of 0.11 indicates that TREX is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.11, TREX is in the better half of the industry, outperforming 76.19% of the companies in the same industry.

		Industry Rank	Sector Rank
Debt/Equity	0.11
Debt/FCF	10.6
Altman-Z	9.86

ROIC/WACC1.76

WACC9.14%

2.3 Liquidity

TREX has a Current Ratio of 1.20. This is a normal value and indicates that TREX is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.20, TREX is doing worse than 88.10% of the companies in the same industry.
TREX has a Quick Ratio of 1.20. This is a bad value and indicates that TREX is not financially healthy enough and could expect problems in meeting its short term obligations.
The Quick ratio of TREX (0.67) is worse than 92.86% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1.2
Quick Ratio	0.67

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The earnings per share for TREX have decreased strongly by -11.42% in the last year.
TREX shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.63% yearly.
The Revenue has been growing slightly by 0.10% in the past year.
Measured over the past years, TREX shows a quite strong growth in Revenue. The Revenue has been growing by 9.09% on average per year.

EPS 1Y (TTM)-11.42%

EPS 3Y-1.7%

EPS 5Y10.63%

EPS Q2Q%37.84%

Revenue 1Y (TTM)0.1%

Revenue growth 3Y-1.28%

Revenue growth 5Y9.09%

Sales Q2Q%22.09%

3.2 Future

TREX is expected to show a decrease in Earnings Per Share. In the coming years, the EPS will decrease by -3.31% yearly.
Based on estimates for the next years, TREX will show a small growth in Revenue. The Revenue will grow by 3.90% on average per year.

EPS Next Y-10.34%

EPS Next 2Y-10.43%

EPS Next 3Y-3.31%

EPS Next 5YN/A

Revenue Next Year1.2%

Revenue Next 2Y2.41%

Revenue Next 3Y3.9%

Revenue Next 5YN/A

3.3 Evolution

The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 21.93, the valuation of TREX can be described as rather expensive.
The rest of the industry has a similar Price/Earnings ratio as TREX.
TREX's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.21.
Based on the Price/Forward Earnings ratio of 25.50, the valuation of TREX can be described as expensive.
Based on the Price/Forward Earnings ratio, TREX is valued a bit more expensive than the industry average as 66.67% of the companies are valued more cheaply.
TREX's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 25.98.

		Industry Rank	Sector Rank
PE	21.93
Fwd PE	25.5

4.2 Price Multiples

The rest of the industry has a similar Enterprise Value to EBITDA ratio as TREX.
TREX's Price/Free Cash Flow ratio is a bit more expensive when compared to the industry. TREX is more expensive than 69.05% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	434.62
EV/EBITDA	13.51

4.3 Compensation for Growth

The excellent profitability rating of TREX may justify a higher PE ratio.
A cheap valuation may be justified as TREX's earnings are expected to decrease with -3.31% in the coming years.