Value
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.7 |
| P/S | 7.5 |
| EV/EBITDA | 2.0 |
| Fwd P/E | 7.0 |
| PEG | 4.6 |
| Analyst target | 5.0 |
- ▸Forward P/E: 18.0x
- ▸PEG: 1.88
AWI · Why this verdict
Why Armstrong World Industries (AWI) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.7/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Armstrong World Industries is a high-quality building-products business with 36% ROE, 18% margins and a wide moat, but it missed EPS in 3 of the last 4 quarters. With only 4.7% upside to the analyst target against 9.0% downside, the reward-to-risk of 0.52 is thin.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Armstrong is a high-quality business with excellent ROE of 36%, strong margins of 18% and a wide economic moat, ranking well above peers on returns. Quality breakdown | ROE should stay above 30% and operating margin near 18% over the next 12 months. | ↓Deteriorating |
| CounterFree cash flow converts only 67% of net income, an earnings-quality warning, and a high ROE may be flattered by leverage. | ||
The company missed EPS estimates in 3 of the last 4 quarters, including a 5.3% miss in the latest report, with an average surprise of -2.7%. Miss count | EPS surprises should turn positive and the 3-miss run should end by the report due 2027-02-23. | ↓Deteriorating |
| CounterMisses are modest (4% to 6.4%) and the latest quarter's EPS of $2.26 is still well above year-ago levels, so the trend may reflect high estimates. | ||
The price of $166.34 is only 4.7% below the $174.16 analyst target against 9.0% downside to the stop, a reward-to-risk of 0.52. Estimated upside | Upside should widen above 15% via a pullback or target increases. | ↓Deteriorating |
| CounterAnalyst upside of 20% is also cited on raw targets, so analysts see more room than the haircut target suggests. | ||
Price is below its 200-day average, whose slope is -2.2% over 30 days, a confirmed downtrend, although rising on-balance volume shows accumulation. Momentum breakdown | Price should reclaim the 200-day average and the slope should turn flat or positive. | Tripped↑Improving |
| CounterRising volume accumulation and a recovering momentum score of 5.2 suggest the downtrend may be nearing an end. | ||
63.0% of sales go to building materials distributors, a high customer concentration, and the put/call ratio is elevated at 6.78. Bear case | Distributor share should stay stable and put/call should ease below 3. | ↓Deteriorating |
| CounterDistributor channels are standard in building products and long relationships may reduce risk; high put volume may reflect hedging. | ||
Armstrong is a high-quality business with excellent ROE of 36%, strong margins of 18% and a wide economic moat, ranking well above peers on returns.
↓DeterioratingQuality breakdown
- Expectation
- ROE should stay above 30% and operating margin near 18% over the next 12 months.
CounterFree cash flow converts only 67% of net income, an earnings-quality warning, and a high ROE may be flattered by leverage.
The company missed EPS estimates in 3 of the last 4 quarters, including a 5.3% miss in the latest report, with an average surprise of -2.7%.
↓DeterioratingMiss count
- Expectation
- EPS surprises should turn positive and the 3-miss run should end by the report due 2027-02-23.
CounterMisses are modest (4% to 6.4%) and the latest quarter's EPS of $2.26 is still well above year-ago levels, so the trend may reflect high estimates.
The price of $166.34 is only 4.7% below the $174.16 analyst target against 9.0% downside to the stop, a reward-to-risk of 0.52.
↓DeterioratingEstimated upside
- Expectation
- Upside should widen above 15% via a pullback or target increases.
CounterAnalyst upside of 20% is also cited on raw targets, so analysts see more room than the haircut target suggests.
Price is below its 200-day average, whose slope is -2.2% over 30 days, a confirmed downtrend, although rising on-balance volume shows accumulation.
Tripped↑ImprovingMomentum breakdown
- Expectation
- Price should reclaim the 200-day average and the slope should turn flat or positive.
CounterRising volume accumulation and a recovering momentum score of 5.2 suggest the downtrend may be nearing an end.
63.0% of sales go to building materials distributors, a high customer concentration, and the put/call ratio is elevated at 6.78.
↓DeterioratingBear case
- Expectation
- Distributor share should stay stable and put/call should ease below 3.
CounterDistributor channels are standard in building products and long relationships may reduce risk; high put volume may reflect hedging.
Per-dimension breakdown
Quality
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 7.2 |
| Gross margin | 3.9 |
| Op margin | 8.4 |
| Net margin | 9.2 |
| Current ratio | 5.4 |
| FCF quality | 5.1 |
| Moat | 7.5 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 36%
- ▸Strong margins: 18%
- ▸Earnings quality warning: 66% FCF/NI
- ▸Wide economic moat
Growth
4.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.5 |
| EPS growth | 3.9 |
Momentum
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 5.1 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.0 |
| Price target | 7.3 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
5.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.9 |
| quality rank | 8.9 |
| growth rank | 5.4 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.8 |
| support resistance | 1.0 |
| 52w position | 6.7 |
Risk (lower is worse)
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.0 |
| days to cover | 6.6 |
| volatility | 4.8 |
| put call | 0.0 |
| implied vol | 6.9 |
| beta | 6.4 |
| debt equity | 7.3 |
- ▸Elevated put/call: 7.84
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 1.2 |
| dividend safety | 6.8 |
- ▸Earnings concerns: 1B/3M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:7.7>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:111d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.1<1.5@spot
Warning (1)
- DEATH_CROSS:momentum=7.7>=5.0 recovering
Reward-to-Risk
0.15
Upside
+1.8%
Downside
11.5%
Sizing output
AVOID
SetupMomentum Cont — Trend continuation, RSI 59, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.2 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 7.7) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.1<1.5@spot) reinforce the read. Current asymmetry R:R is 0.15 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 7.7, Quality at 7.3, and Sentiment at 6.6; the weakest are Technical at 3.2, Catalyst at 3.6, and Growth at 4.7. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 0.15 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1High Quality Wide Moat Returns
Trip ifROE falls below 25% from current 36%.
- P2Recent Earnings Misses
Trip ifEPS surprise exceeds 0% for 2 consecutive quarters.
- P3Thin Upside To Analyst Target
Trip ifUpside to the analyst target exceeds 15% from current 4.7%.
- P4Downtrend Below 200 Day AverageTripped
Trip ifPrice rises above the 200-day average with momentum score exceeding 6.0 from current 5.2.
- P5Distributor Customer Concentration
Trip ifDistributor share of sales exceeds 70% from current 63.0%.