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Quanex (NX)
NYSE:NX
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Quanex
(NYSE:NX)
69Neutral
Positive Factors
Financial Performance
Quanex Building Products Corp. reported better than anticipated results as revenue, EBITDA, and EPS came in ahead of consensus estimates and prior guidance.
Strategic Growth
The Tyman deal closure marks a major step in Quanex’s strategic roadmap by significantly increasing the company’s scale, global footprint, and product offering.
Valuation
Quanex trades at the lowest P/E multiple in the last 15+ years, offering a valuation disconnect with its growth potential.
Negative Factors
Consumer Confidence
Seemingly little upside to end markets near term with consumer confidence affected by significant unknowns in the macro backdrop and future costs.
Market Conditions
Severe weather and soft market demand weighed on revenue for both legacy Quanex and Tyman operations.
Quanex (NX) vs. S&P 500 (SPY)
Market Cap
$791.58M
Dividend Yield1.93%
Average Volume (3M)438.40K
Price to Earnings (P/E)28.4
Beta (1Y)0.91
Revenue Growth29.87%
EPS Growth-76.37%
CountryUS
Employees7,068
SectorIndustrials
Sector Strength80
IndustryConstruction
Share Statistics
EPS (TTM)0.19
Shares Outstanding47,230,263
10 Day Avg. Volume404,237
30 Day Avg. Volume438,398
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap2.29
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit5.93
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$38.00Price Target Upside119.15% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Quanex Business Overview & Revenue Model
Company DescriptionQuanex Building Products Corporation, together with its subsidiaries, provides components for the fenestration industry in the United States, Europe, Canada, Asia, and internationally. The company operates through three segments: North American Fenestration, European Fenestration, and North American Cabinet Components. It offers flexible insulating glass spacers, extruded vinyl profiles, window and door screens, and precision-formed metal and wood products, as well as cabinet doors and other components for original equipment manufacturers (OEMs) in the kitchen and bathroom cabinet industry. The company also provides various non-fenestration components and products, including solar panel sealants, trim moldings, vinyl decking, fencing, water retention barriers, and conservatory roof components. It sells its products to OEMs in the building products industry through sales representatives, direct sales force, distributors, and independent sales agents. The company was founded in 1927 and is based in Houston, Texas.
How the Company Makes MoneyQuanex makes money primarily through the manufacture and sale of its building products, targeting both the residential and commercial construction industries. The company's revenue streams are largely derived from sales of its window and door components, which include energy-efficient spacer systems, vinyl profiles, and other related materials. Quanex also generates income from its kitchen and bath cabinetry products. Key factors contributing to its earnings include its strong customer relationships, strategic acquisitions, and a commitment to innovation in energy efficiency and sustainable building solutions. Partnerships with major construction firms and distributors also play a significant role in expanding its market reach and driving sales.
Quanex Financial Statement Overview
Summary
Quanex shows strong revenue growth and effective cost management, reflected in a solid gross profit margin. However, challenges include a declining net profit margin and a significant drop in ROE. While the financial foundation is stable, profitability and liquidity issues need addressing.Income Statement
The company shows a solid gross profit margin of 43.96% for TTM, indicating efficient cost management. However, the net profit margin has decreased to 0.83%, reflecting challenges in controlling other expenses. Revenue growth is positive at 12.6% from the previous year, demonstrating a robust increase in sales. Nevertheless, the EBIT margin has declined significantly, suggesting potential inefficiencies or increased operational costs.75
Positive
Balance Sheet
Quanex's debt-to-equity ratio is 0.91, reflecting moderate leverage but manageable risk. The equity ratio stands at 43.79%, indicating a stable asset financing structure. However, return on equity has dropped to 1.23%, signaling decreased profitability for shareholders. The company maintains a balanced approach to asset and liability management, although the lower ROE may concern investors.68
Positive
Cash Flow
Quanex's free cash flow has decreased, resulting in a negative growth rate of -35.6%, which may impact future investments. The operating cash flow to net income ratio is strong at 6.07, suggesting effective cash generation relative to profits. However, the free cash flow to net income ratio is lower at 2.79, indicating potential constraints in liquidity after capital expenditures.72
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.28B | 1.13B | 1.22B | 1.07B | 851.57M | Gross Profit |
| 305.62M | 277.52M | 268.50M | 240.61M | 192.82M | EBIT |
| 54.83M | 110.70M | 111.28M | 81.87M | 55.27M | EBITDA |
| 123.00M | 148.05M | 152.43M | 125.36M | 102.77M | Net Income Common Stockholders |
| 33.06M | 82.50M | 88.34M | 56.98M | 38.50M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 97.74M | 58.47M | 55.09M | 40.06M | 51.62M | Total Assets |
| 2.32B | 831.14M | 724.62M | 717.32M | 691.59M | Total Debt |
| 892.98M | 116.39M | 87.69M | 106.50M | 169.75M | Net Debt |
| 795.23M | 57.91M | 32.59M | 66.44M | 118.13M | Total Liabilities |
| 1.31B | 285.59M | 259.78M | 297.54M | 335.83M | Stockholders Equity |
| 1.01B | 545.55M | 464.83M | 419.78M | 355.76M |
| Cash Flow | Free Cash Flow | |||
| 51.73M | 109.66M | 64.84M | 54.58M | 75.07M | Operating Cash Flow |
| 88.81M | 147.05M | 97.97M | 78.59M | 100.80M | Investing Cash Flow |
| -420.59M | -128.44M | -32.96M | -18.71M | -25.22M | Financing Cash Flow |
| 385.16M | -16.15M | -45.88M | -71.86M | -55.12M |
Quanex Technical Analysis
Positive
17.34
Price Trends
18.11
Negative
20.53
Negative
24.63
Negative
Market Momentum
-0.30
Negative
50.49
Neutral
41.70
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NX, the sentiment is Positive. The current price of 17.34 is above the 20-day moving average (MA) of 16.70, below the 50-day MA of 18.11, and below the 200-day MA of 24.63, indicating a neutral trend. The MACD of -0.30 indicates Negative momentum. The RSI at 50.49 is Neutral, neither overbought nor oversold. The STOCH value of 41.70 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NX.
Quanex Risk Analysis
Quanex disclosed 26 risk factors in its most recent earnings report. Quanex reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Quanex Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $881.43M | 20.07 | 27.48% | 1.91% | -1.05% | -2.78% | |
78 Outperform | $963.16M | 21.66 | 12.06% | 1.99% | 0.92% | 21.96% | |
74 Outperform | $973.60M | 16.12 | 22.15% | 3.94% | -0.79% | -13.64% | |
69 Neutral | $791.58M | 28.37 | 1.56% | 1.93% | 29.87% | -76.37% | |
67 Neutral | $904.29M | 23.69 | 4.27% | 1.33% | -5.39% | 12.14% | |
64 Neutral | $4.24B | 11.64 | 5.23% | 249.83% | 4.07% | -10.54% | |
63 Neutral | $832.98M | ― | -1.35% | ― | 13.73% | 86.81% |
* Industrials Sector Average
Performance Comparison
NX
Quanex
17.34
-17.15
-49.72%
ATRO
Astronics
26.85
8.24
44.28%
GRC
Gorman-Rupp Company
37.75
4.74
14.36%
NSSC
Napco Security Technologies
26.20
-17.82
-40.48%
HLIO
Helios Technologies
31.34
-19.88
-38.81%
GIC
Global Industrial Company
25.97
-8.75
-25.20%
Quanex Earnings Call Summary
Earnings Call Date:Mar 10, 2025
(Q1-2025)
| % Change Since: -14.75%|
Next Earnings Date:Jun 05, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant revenue growth and strong adjusted EBITDA performance driven by the Timon acquisition and synergy realization. However, the company faced challenges such as a reported net loss, declining sales in key segments, and macroeconomic uncertainties affecting consumer confidence. Despite these challenges, the company's strategic initiatives and synergy efforts provide a positive outlook.Q1-2025 Updates
Positive Updates
Significant Revenue Increase
Quanex Building Products Corporation reported net sales of $400 million during the first quarter of 2025, representing an increase of approximately 67% compared to $239.2 million for the same period of 2024. This was primarily driven by the Timon acquisition.
Strong Adjusted EBITDA Growth
Adjusted EBITDA for Q1 2025 nearly doubled to $38.5 million from $19.3 million during the same period last year, equating to adjusted EBITDA margin expansion of approximately 150 basis points year-over-year.
Synergy Realization
The company is on track to meet its publicly announced target of $30 million in run rate synergies from the Timon acquisition by the end of year two, with additional synergies being explored.
Record Safety Performance
Quanex achieved record safety performance in the first quarter along with improvements in service and quality metrics.
Debt Repayment
Since the Timon acquisition, Quanex has repaid $65 million in debt, reducing its leverage ratio to 2.2 times.
Negative Updates
Net Loss Reported
The company reported a net loss of $14.9 million or $0.32 per diluted share during the three months ended January 31, 2025, compared to net income of $6.2 million or $0.19 per diluted share during the same period of 2024.
Decline in North American Fenestration Segment
Net sales in the North American Fenestration segment decreased by 9.2% compared to the first quarter of 2024, with volumes declining approximately 8% year-over-year.
Challenges in European Fenestration Segment
The European Fenestration segment saw a 2% revenue decrease in Q1 2025 compared to Q1 2024, with adjusted EBITDA margin only improving by 30 basis points year-over-year.
Negative Cash Flow
Free cash flow was negative for the quarter due to the seasonality of the business and one-time items related to integration costs and achieving targeted cost synergies.
Impact of Macroeconomic Uncertainties
Macroeconomic uncertainties, including interest rate movements and tariff concerns, have negatively affected consumer confidence and demand.
Company Guidance
During the first quarter 2025 earnings call for Quanex Building Products Corporation, the guidance was reaffirmed based on several key metrics and expectations. The company reported consolidated net sales of $400 million, a 67% increase year-over-year, driven by the Timon acquisition completed in August 2024. Despite a net loss of $14.9 million for the quarter, adjusted net income was $9 million, with an adjusted EBITDA of $38.5 million, reflecting a significant margin expansion. The company aims to achieve $30 million in run rate synergies from the Timon acquisition by the end of year two, with a focus on integrating the businesses and reorganizing into three segments: Hardware Solutions, Extruded Solutions, and Custom Solutions. The reaffirmed full-year guidance projects net sales of $1.84 to $1.86 billion and adjusted EBITDA of $270 to $280 million, with expectations for a seasonal revenue increase of 9% to 11% in the second quarter and adjusted EBITDA margin expansion of 350 to 400 basis points.Quanex Corporate Events
Dividends
Quanex Declares Quarterly Cash Dividend for 2025
Positive
Feb 27, 2025
On February 27, 2025, Quanex Building Products Corporation announced that its Board of Directors declared a quarterly cash dividend of $0.08 per share on the company’s common stock, payable on March 31, 2025, to shareholders of record on March 17, 2025. This announcement highlights Quanex’s commitment to returning value to its shareholders and may positively impact its market positioning by reinforcing investor confidence.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.