Armstrong World Industries, Inc. AWI announced a hike of 10% in its quarterly cash dividend.

This leading global producer of ceiling systems raised the quarterly dividend payout to 30.8 cents per share from 28 cents. The amount will be paid out on Nov. 21, 2024, to shareholders of record as of Nov. 7. Based on the closing price of $138.18 per share on Oct. 23, 2024, the stock has a dividend yield of 0.89%.

AWI has been boosting shareholder value through regular dividend payments since December 2018. This marks the company’s sixth consecutive year of increasing its cash dividend.

The company’s healthy balance sheet, coupled with its ability to consistently grow its adjusted free cash flow, supports its commitment to reward shareholders regularly.

AWI’s Enhancement of Shareholder Value

Armstrong World has been actively managing cash flows, returning considerable free cash to investors through share repurchases and dividends. In October 2023, the company increased its quarterly dividend to 28 cents per share, marking a 10% rise from the year-ago period’s levels.

Investors always prefer a return-generating stock and a high-dividend-yielding one is much coveted. It goes without saying that stockholders are always looking for companies with a track record of consistent and incremental dividend payments.

At the second-quarter end, it had cash and cash equivalents of $73.6 million, up from $70.8 million at 2023-end. Long-term debt, less current instalments, was $621.5 million, up from 2023-end level of $564.3 million. Nonetheless, its current cash level is enough to meet short-term obligations of $22.5 million.

This apart, the company has returned more than $1 billion via dividends and share repurchases from 2016 through 2023. At 2023-end, it authorized to purchase up to $1.7 billion of its outstanding shares of common stock through December 2026. During the second quarter, Armstrong World repurchased 0.1 million shares for $10 million, excluding commissions and taxes. As of June 30, 2024, $692 million shares were remaining under the current authorized share repurchase program.

Digital & Technology Initiatives of Armstrong World Bode Well

AWI's ProjectWorks and Canopy platforms have become central to the company’s growth initiatives. Canopy, which focuses on small business renovation projects, saw a 20% increase in sales year over year in the second quarter of 2024, while ProjectWorks has expanded its reach, resulting in a 52% rise in quoted project values in the first half of 2024. These platforms are enabling AWI to differentiate itself in the marketplace by improving customer engagement and driving higher sales volumes and AUVs.

Besides, the company has been making the most from moderation of input costs, the acquisitions of 3form and BOK Modern and large federally funded transportation projects. The company’s focus on innovation, particularly in energy-efficient and digital solutions, positions it well for future growth, even amid broader market uncertainties.

Price Performance & Earnings Prospect

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Armstrong World’s shares have gained 40.6% compared with the Zacks Building Products - Miscellaneous industry’s 21.3% growth so far this year.

For the third quarter, earnings are pegged at $1.75 per share, suggesting growth of 9.4% from the year-ago quarter’s figure of $1.60. The consensus estimate for net sales is pinned at $385.7 million, indicating an 11.1% increase from the prior-year quarter’s figure.

AWI’s Zacks Rank & Key Picks

Currently, Armstrong World carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Construction sector are:

Latham Group, Inc. SWIM currently sports a Zacks Rank #1 (Strong Buy). It has topped earnings estimates in two of the trailing four quarters and missed once, with an average surprise of 90%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for SWIM’s 2024 earnings per share (EPS) indicates a rise of 750% from prior-year levels. SWIM shares have gained 151.3% year to date (YTD).

CRH plc CRH presently carries a Zacks Rank #2 (Buy). CRH has a trailing four-quarter earnings surprise of 33.3%, on average.

The Zacks Consensus Estimate for CRH’s 2024 sales and EPS indicates a rise of 4.6% and 17.8%, respectively, from the prior-year levels. CRH shares have gained 31.3% YTD.

Aspen Aerogels, Inc. ASPN presently carries a Zacks Rank #2. Aspen has a trailing four-quarter earnings surprise of 138.5%, on average.

The Zacks Consensus Estimate for ASPN’s 2024 sales and EPS indicates a rise of 71.6% and 121.2%, respectively, from the prior-year levels. ASPN shares have gained 26.1% YTD.
 

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