Armstrong World Industries Inc (AWI) stock analysis

P/E above its 5-year median

Armstrong World Industries's P/E of 23.6 is above its own 5-year median of 23.0.

P/E below the industry

Armstrong World Industries's P/E of 23.6 is below the Miscellaneous Plastics Products median of 30.9.

EV/EBITDA above its 5-year median

Armstrong World Industries's EV/EBITDA of 13.6 is above its 5-year median of 13.4.

P/B above the industry

Armstrong World Industries's price-to-book of 8.27 is above the Miscellaneous Plastics Products median of 3.56.

Trading below fair value

The share price of $176.62 is below our fair value estimate of $187.86.

Margin of safety under 20%

The price is 6.0% below fair value, less than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 9.5% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 17.4% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing slower than the industry

Revenue grew 9.1% over the last twelve months; the Miscellaneous Plastics Products median is 9.2%.

Guidance raised

Armstrong World Industries raised its For the Year Ended December 31, 2026 Net sales outlook on Jul 28, 2026.

Gross margin slipping

Gross margin was 39.8% over the last twelve months, against 40.5% a year earlier.

Return on equity over 15%

Return on equity was 36.0% over the last twelve months and averaged 38.5% over five years.

Return on capital over 10%

Return on invested capital was 27.3%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Armstrong World Industries's return on equity of 36.0% is above the Miscellaneous Plastics Products median of 7.1%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin above its 5-year average

Net margin was 18.4% over the last twelve months, against a 5-year average of 17.5%.

Net margin above the industry

Armstrong World Industries's net margin of 18.4% is above the Miscellaneous Plastics Products median of 5.0%.

High debt

Debt is 52.5% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 159% five years ago to 52.5%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 70.7% of total debt.

Interest well covered

Operating income covers interest expense 14.9 times.

Short-term assets cover short-term debts

Current assets are 1.45 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 7.10; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Armstrong World Industries paid dividends worth 0.6% of the share price over the last twelve months.

Yield below Treasuries

The 0.6% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Armstrong World Industries yields 0.6%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 8 fiscal years.

Covered by earnings

Dividends take 18.4% of net income.

Covered by free cash flow

Dividends take 27.1% of free cash flow.