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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on TREX

Trex Company's recent performance was negatively impacted by disappointing Q3 2025 results, which missed expectations due to weak consumer demand, soft repair/remodeling markets, and elevated distributor inventories. The company's revenue and earnings growth was overshadowed by a slump in spending for housing projects. Management slashed revenue and profit guidance, forecasting margin compression and higher SG&A costs in 2026. Investigations into potential securities fraud have been launched by several law firms, including Hagens Berman, The Law Offices of Frank R. Cruz, and Glancy Prongay & Murray LLP.

1.c. Company Highlights

2. Trex's Q3 Earnings: A Mixed Bag

Trex's third quarter net sales were $285 million, a 22% increase from $234 million in 2024, driven by growth across product lines and lower labor costs and production efficiencies. Gross margin was 40.5%, a 60 basis point expansion from 39.9% in the prior year. However, EPS came in at $0.51, missing estimates of $0.567. Adjusted EBITDA was $90 million, up 33% compared to $68 million in the prior year.

Publication Date: Nov -08

📋 Highlights
  • Q3 Results Below Guidance:: 5% below midpoint due to easing consumer demand in August-September.
  • Net Sales Growth:: $285M (22% YoY increase) driven by product line growth and cost efficiencies.
  • Gross Margin Expansion:: 40.5% (60 bps higher YoY) despite 2026 headwinds from depreciation and mix (250 bps reduction expected).
  • Full-Year Guidance Revision:: $1.15–1.16B net sales (flat YoY) and 28–28.5% adjusted EBITDA margin forecast.
  • Share Buybacks & Cost Control:: $50M repurchase program announced, SG&A to return to 18% of sales by 2026 (16.5–17% in 2025).

Operational Performance

The company's strong positioning in the pro and home center channels, new products accounting for 25% of sales, and robust railing sales were positive takeaways. Bryan Fairbanks, President and CEO, stated that "we're seeing a more competitive market environment from a spending perspective. To ensure the Trex name is in front of buyers, we're focusing on getting the product in front of consumers as they make their purchasing decisions."

Guidance and Outlook

Trex anticipates a muted fourth quarter due to consumer demand remaining muted and pro channel partners lowering their inventories. As a result, they are revising their full year net sales and adjusted EBITDA margin guidance ranges. Analysts estimate next year's revenue growth at 4.0%. The company's guidance for the remainder of 2025 includes net sales ranging from $1.15 billion to $1.16 billion and adjusted EBITDA margin ranging from 28% to 28.5%.

Valuation

With a P/E Ratio of 17.87 and EV/EBITDA of 11.15, the stock appears to be reasonably valued. The company's ROE of 20.87% and ROIC of 15.44% indicate strong profitability. The recent announcement of a $50 million share repurchase program also demonstrates the company's commitment to returning value to shareholders.

Challenges Ahead

The company expects a 250 basis point reduction in gross margin in 2026 due to depreciation and mix impacts. However, Bryan Fairbanks mentioned that "we expect to see opportunity to offset it in the following year." The company's strategy to drive growth in railing and its confidence in its strategy to drive growth in the Pro channel are positive signs.

3. NewsRoom

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Top Stocks to Double Up on Right Now

Dec -04

Source: fool.com

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Trex Company Appoints B. Andrew Rose to Board of Directors

Dec -03

Source: businesswire.com

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Head to Head Contrast: Trex (NYSE:TREX) vs. Nature Wood Group (NASDAQ:NWGL)

Dec -03

Source: defenseworld.net

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Advantage Alpha Capital Partners LP Has $4.08 Million Stock Holdings in Trex Company, Inc. $TREX

Nov -28

Source: defenseworld.net

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Trex Named “The Coolest Thing Made in Virginia” by Virginia Manufacturing Association

Nov -26

Source: globenewswire.com

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Trex Company, Inc. (TREX) Faces Investor Scrutiny Amid Disappointing Q3, Revised 2025 Sales Growth to Flat -- Hagens Berman

Nov -24

Source: globenewswire.com

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INVESTOR ALERT: Pomerantz Law Firm Investigates ClaimsOn Behalf of Investors of Trex Company, Inc. - TREX

Nov -20

Source: prnewswire.com

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Bragar Eagel & Squire, P.C. Is Investigating Trex, United Homes Group, and Nidec and Encourages Investors to Contact the Firm

Nov -19

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.95%)

6. Segments

Trex Residential

Expected Growth: 9.95%

Trex Residential's 9.95% growth is driven by increasing demand for outdoor living spaces, rising popularity of composite decking, and growing adoption of sustainable building materials. Additionally, the company's strategic expansion into new markets, innovative product offerings, and strong brand recognition contribute to its growth momentum.

7. Detailed Products

Trex Decking

High-performance, low-maintenance decking made from recycled materials

Trex Railing

Durable and stylish railing systems for decks and stairs

Trex Outdoor Lighting

Energy-efficient outdoor lighting solutions for decks, patios, and walkways

Trex Outdoor Furniture

Durable and stylish outdoor furniture made from recycled materials

Trex Deck Drainage

Water management systems for decks and patios

Trex Outdoor Storage

Weather-resistant outdoor storage solutions for decks and patios

8. Trex Company, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Trex Company, Inc. faces moderate threat from substitutes due to the presence of alternative decking materials such as wood, aluminum, and composite materials.

Bargaining Power Of Customers

Trex Company, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's strong brand reputation and high-quality products reduce the likelihood of customers switching to competitors.

Bargaining Power Of Suppliers

Trex Company, Inc. relies on a few large suppliers for raw materials, which gives them some bargaining power. However, the company's strong relationships with suppliers and its ability to negotiate prices mitigate this risk.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the decking industry, including significant capital requirements, regulatory hurdles, and the need for specialized manufacturing capabilities.

Intensity Of Rivalry

The decking industry is highly competitive, with several established players competing for market share. Trex Company, Inc. faces intense rivalry from competitors such as TimberTech, Azek, and Fiberon.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 4.27%
Debt Cost 3.95%
Equity Weight 95.73%
Equity Cost 11.92%
WACC 11.58%
Leverage 4.47%

11. Quality Control: Trex Company, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

34.5$

Current Price

34.5$

Potential

-0.00%

Expected Cash-Flows