Bear of the Day: Trex Company (TREX)

Trex Company TREX is not expecting a revenue turnaround in 2025 as remodeling demand remains tepid. Analysts are forecasting this Zacks Rank #5 (Strong Sell) to see earnings decline again in 2026.

Trex makes wood-alternative decking and railing as well as high performance, low maintenance outdoor living products such as pergolas, spiral stairs, fencing, lattice, cornhole and outdoor furniture. It sells through more than 6,700 retail outlets across six continents.

Trex Missed on Earnings in the Third Quarter of 2025

On Nov 4, 2025, Trex reported its third quarter 2025 earnings and missed on earnings. It reported $0.51 versus the Zacks Consensus of $0.56.

It was the first earnings miss in three years. Trex has an excellent earnings surprise track record. It has only missed twice in the last five years.

Sales rose 22.1% to $285 million on the back of strong railing sales, which are tracking to be up double digits on the year. However, decking continues to struggle.

“While we saw signs of improvement in Repair and Remodel spending as the season began, the second half of the season reflected the weaker market conditions that the industry has experienced in the past two years,” said Bryan Fairbanks, President and CEO.

“This resulted in lower-than-anticipated third quarter sales, and we expect this trend to continue in the seasonally slower fourth quarter,” he added.

Analysts Slash Trex’s Full Year 2025 and 2026 Earnings Estimates

With such a bearish outlook, it’s not a surprise that the analysts cut their estimates for both 2025 and 2026.

Seven estimates were cut in the last 60 days for 2025, pushing the Zacks Consensus down to $1.83 from $2.21. That’s an earnings decline of 12.4%.

Eight estimates were also cut in the prior 2 months for 2026. The Zacks Consensus fell to $1.66 from $2.51 in that time. That’s another 9% decline.

These are steep, and sudden, earnings cuts. This is what it looks like on the price and consensus chart.

You can see why it has the Zacks Rank of #5, which is a Strong Sell. No analyst has raised their estimate in the last 60 days.

Trex Shares Sink in 2025

Trex shares plunged after the company gave its lower guidance in Nov 2025.

Is it a deal?

Trex now trades with a forward price-to-earnings (P/E) ratio of 19.4. A P/E ratio under 15 usually indicates value. Trex is not that cheap at 19.4x.

With strong free cash flows, Trex’s board has authorized a $50 million share repurchase program. It doesn’t pay dividends.

Investors interested in the home remodeling industry might want to wait on the sidelines to start 2026 to see if there is any recovery. For now, market conditions remain challenging.

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This article originally published on Zacks Investment Research (zacks.com).

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