Tecnoglass (NYSE:TGLS) is a Colombian window and architectural glass maker. It produces glass for all sorts of applications, from individual family homes and residential apartment buildings up to marquee projects such as airports, museums, and hotels.
Tecnoglass' laminated glass graces the Hyatt Centric; Fort Lauderdale, Florida. | Source: Company website.
The company went public via SPAC years ago (back when that was still a red flag), and indeed, Tecnoglass' flaws soon became apparent. Management struggled to get up to speed with international accounting standards (it's a big jump from being a family-run Colombian small business to having a Nasdaq listing). Additionally, the company's capital allocation decisions, such as paying a huge dividend while barely generating cash flow, also perplexed outsiders.
Throw in a consistently weak Colombian economy, and TGLS stock has been an underperformer since its public markets debut:
This is entirely reasonable given management's iffy execution thus far as a public company and the poor macroeconomic backdrop in its domestic Colombian market.
However, at some point, enough is enough. Tecnoglass did report its best results as a public company in 2019, and based on the current housing boom, things should get even better than they were last year for the company going forward.
Thus, this sets up an asymmetric play ahead of Q3 earnings on November 6th. If the company announces stronger-than-expected results, the stock should head back to pre-pandemic levels of $8 or higher. And if earnings don't come in hot, the stock probably doesn't do much of anything, given that it has been flat all summer and fall anyway. Expectations are low, yet the company's industry is booming. And, three months ago, Tecnoglass itself quietly reported a record backlog coming out of Q2:
[W]e are now seeing quoting and bidding activity that is in line with pre-pandemic
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