BB&T Ups American Woodmark to 'Strong Buy'

Analyst Joel Havard thinks the kitchen cabinet distributor can produce positive results for the next few years

BB&T Capital upgraded American Woodmark (AMWD ) to strong buy from hold.

On Wednesday the company posted 80 cents third quarter earnings per share. Analyst Joel Havard tells salesforce despite certain near-term challenges, he thinks American Woodmark can produce positive year-over-year sales and earnings per share comps for the next few years.

Havard says key metrics include the pace of recovery at Home Depot, continued success at Lowe's, and better-than-expected growth from builder-direct channel. He says free-cash generation is poised for a rebound next year to $5.15 per share, and debt is nominal at 10% of total capitalization with untapped revolver.

Havard raised his $3.70 fiscal 2003 (April) earnings per share estimate to $3.88, and trimsmed the $4.70 fiscal 2004 estimate to $4.60. He also set a $5.25 fiscal 2005 estimate.

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