Hot stock to watch: American Woodmark Corporation (NASDAQ: AMWD)

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American Woodmark Corporation (NASDAQ: AMWD) stock rose over 1.4% in the pre-market session of May 27th, 2020 (as of 6:12 pm GMT-4; Source: Google finance) after the company posted decent results for the fourth quarter of FY 20. The new construction market continues to be solid during the fourth quarter of fiscal 2020 as demand drops related to COVID-19 not impacting the business until the first quarter of fiscal 2021. Recognizing a 60-day to 90-day lag between start and cabinet installation, the overall market activity in single-family homes grew up 21% during the fourth quarter of 2020. However, single-family completions for the fiscal fourth quarter were rose up only 3%. The company’s builder channel net sales rose 4.6% for the quarter. The made-to-order frame direct-to-builder business comped positively and this was however partially offset by price and mix and negative comps in the frameless business. The remodel business felt the impacts of state closures much sooner than the new construction business with home centers limiting shoppers and hours and many dealers happened to close their physical locations. The combined home center and independent dealer and distributor channel net sales fell 5.8% for the fourth quarter, with home centers declining 6.3% and dealer distributor decreasing 4.2%.

The company has reported the adjusted net income of $22.5 million in the current fiscal year compared to $31.5 million, which was negatively affected due to lower sales, tariffs, particleboard supply disruption costs and expenses related to the temporary suspension of operations in the component plants in Mexico.

AMWD in the fourth quarter of FY 20 has reported the adjusted earnings per share of $1.33. The company had reported 2 percent fall in the adjusted revenue to $399.2 million in the fourth quarter of FY 20, beating the analysts’ estimates for revenue of $373.22 million. The company delivered the Adjusted EBITDA of $53.4 million, or 13.4% of net sales compared to $63.8 million, or 15.7% of net sales for the same quarter of the prior fiscal year. For the fiscal year ended April, year-to-date net sales were $1,650 million, which reflects an increase of 0.3% over the same period last year.

For the first fiscal quarter, the company anticipates the demand trends to result in sales decline in the range of approximately 15% to 20%. The decremental margins to be in the range of approximately 40% to 45% as the company work to offset the inefficiencies associated with safety measures taken across the corporation and better match our capacity with demand.

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