AMWD

We rate AMERICAN WOODMARK CORP (AMWD) as Avoid with a composite score of 34.7/100 at a current price of $53.36. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in investment (51th percentile) and value (45th percentile), which together account for the majority of the composite score. Offsetting weakness in quality (27th percentile) and momentum (27th percentile) tempers our overall conviction. We assign a No Moat rating (27/100), High uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

AMERICAN WOODMARK CORP holds a top-quartile position (#0 of 50) within the Construction sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 34.7/100 places it at rank #4141 in our full 7,333-stock universe. At $928M in market capitalization, AMERICAN WOODMARK CORP is a small-cap player in the Construction space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -14% combined with momentum at the 27th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 16% (-7.2pp vs sector) narrow to operating margins of 6% (-1.6pp vs sector) and net margins of 3.9%, yielding a gross-to-net conversion rate of 23%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $53.36, AMERICAN WOODMARK CORP is trading near fair value based on current fundamentals. Our value factor score of 45/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 12.9x (a 33% discount to the sector median of 19.1x), EV/EBITDA of 8.7x (near the sector median), P/B of 0.9x, P/S of 0.5x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a High uncertainty rating to AMERICAN WOODMARK CORP. Key risk factors include weak quality scores (27th percentile), the combination of leverage (69% D/E) and thin margins (3.9% net) amplifies downside risk. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: weak quality scores (27th percentile); the combination of leverage (69% D/E) and thin margins (3.9% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 43th percentile and quality factor at the 27th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our high uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate AMERICAN WOODMARK CORP's capital allocation as Poor. Key concerns include suboptimal returns on capital. Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — AMERICAN WOODMARK CORP significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, AMERICAN WOODMARK CORP receives a Avoid rating with a composite score of 34.7/100 (rank #4141 of 7,333). Our quantitative framework assigns a No Moat (27/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 38/100.

Our analysis does not support a constructive view on AMERICAN WOODMARK CORP at this time. The combination of limited competitive advantages, high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.