Monster Jump Out of Armstrong World Industries

Aside: I am not chasing anything today as the market is pulled very far from its 13 day moving average. If anything if S&P 1220 is broken to the downside, I’d like to do an intraday index short.

Monday, I mentioned the breakout happening in Armstrong World Industries (AWI) [Nov 1, 2010: Keeping an Eye on Armstrong World Industries] but did not want to jump in ahead of earnings. The technical breakout continued all week, and last night’s earnings caused a massive jump this morning, although the stock is giving quite a bit back already. However, it does strike me as *interesting* in terms of “information leak” to watch how the stock moved ….

The results aren’t ‘great’ by any means, but since they beat analysts expectations by a wide margin with a small increase in guidance and the stock was range bound for months, that was all it took. While I like to buy breakouts, I prefer it to be in companies with business that is either very good secularly, or improving dramatically on a cyclical basis. This is sort of a “meh” type of fundamental story…

Armstrong World Industries Inc (AWI) posted better-than-expected quarterly profit, helped by growth at its building products segment, and raised its full-year earnings outlook.

Armstrong World, which makes flooring products, ceiling systems and kitchen and bathroom cabinets, now expects 2010 adjusted earnings of $1.69-$1.79 per share, up from its prior view of $1.55-$1.75 per share.

The company also narrowed its 2010 sales outlook to $2.76-$2.80 billion, from its previous outlook of $2.70-$2.85 billion.

The building products segment grew 6 percent and contributed about 42 percent to sales. Higher margins at the segment helped growth.

All other segments saw a decline in sales.

For the July-September quarter, the company reported net income of $24.6 million, or 42 cents a share, compared with $64.4 million, or $1.12 cents a share, a year ago. Excluding items, the company earned 83 cents a share.

Net sales fell about 2 percent to $739.8 million. Analysts on an average were expecting earnings of 64 cents a share on revenue of $761.1 million..

Disclosure: No position

About Mark Hanna 543 Articles

Affiliation: Hanna Capital, LLC

Mark Hanna is President and Owner of Hanna Capital, LLC, a registered investment advisory firm. Mark has been a follower of markets since the late 80s, with a focus on individual equities since the mid 90s. He has been a well known commentator in the financial blogosphere for the past 5 years, following a career in corpoporate finance and accounting. Mark attended the University of Michigan where he graduated with a degree in Economics.

As an avid reader, Market Montage is the personal blogging site for Mark to share his views on economics, markets, and the like. Occasional cynicism and wit shall be deployed in his postings.

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