Entering text into the input field will update the search result below

American Woodmark: Profitability And Growth Look Bleak

Mar. 22, 2023 10:41 AM ETAmerican Woodmark Corporation (AMWD)MBC2 Comments
Ethan Coyle profile picture
Ethan Coyle


  • Pricing pressures from declining real estate demand will worsen margins and give competitors more opportunities.
  • Management's lack of a unified capital allocation strategy will worsen the debt structure and worsen growth in the future.
  • Poor brand positioning and a lack of competitive advantage will result in declining revenue and margins.

Dark grey cabinetry in large enclosed kitchen

PC Photography/iStock via Getty Images

American Woodmark (NASDAQ:AMWD) has fallen over 50% in the past 5 years and fallen over 10% in the past month. While the valuation looks cheaper, don’t go catching the fallen knife, as this company has more to fall. American

United States graph which depicts the manufacturing and distributions centers

AMWD 2023 Investor Presentation

A graph of the declining housing starts and building permits over 2022


A breakdown of the current estimates of market share of cabinetry industry

MasterBrand Investor Presentation

A graph of the increases in material prices, specifically Oak, Maple, MDF

Refinitiv, Bloomberg

A graph depicting the decline of American Woodmark's return on equity compared to its peers. As of 2022, it had the lowest return on equity

Bloomberg, Refinitiv

A graph of the financal leverage of American Woodmark from 2013. Contains debt-to-assets, equity multiplier, net debt/EBITDA, debt-to-equity


A graph comparing American Woodmark's Net Debt / EBITDA ratio. It shows that since 2018 American Woodmark has had the second largest leverage

Bloomberg, Refinitiv

A matrix of American Woomark's brands based on price and quality

Image created by author with data from Home Depot, Lowes, Yelp, Main Line Kitchen Design (Author Estimates)

A breakdown of American Woodmark's brands by distribution and materials

Home Depot, American Woodmark, Lowes, Kitchen Reviews, Yelp

A graph of the operating margin of American Woodmark's competitors

Refinitiv, Bloomberg

A breakdown of the weightings for the price target

Author Estimates

A breakdown of previous revenues and projected revenue

Bloomberg & Author Estimates

A breakdown of all the Drivers and Margins in the DCF and Exit multiple

Bloomberg & Author Estimates

The breakdown of the WACC calculation, Cost of Debt = 6.13%, Risk free rate = 3.57%, Beta = 1.11, Market Risk Premium = 10.55%, Cost of Equity = 11.3%

Image created by author with data from WSJ, Bloomberg (Author Estimates)

A table breaking down the P/E, EV/EBITDA, EV/EBIT, and EV/Revenue.

Bloomberg, Refinitiv

A tornado graph depicting the range of possibilities of all the multiples from the competitor group

Refinitiv, Bloomberg

A monte carlo simulation of the DCF

Author Estimates

A sensitivity table depicting the changes in WACC and the long-term growth rates on the DCF price targets

Author Estimates

a sensitivity table with changes in WACC and the EBITDA Exit multiple on the price targets

Author Estimates

This article was written by

Ethan Coyle profile picture
I am a long-term investor and make investment analyses based on a multitude of valuation methodologies, including Discounted cash flow to equity models, Multiplies Analysis, and exit multiples. I am currently working towards getting my CFA charter.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.