Buffett Brain · Research note
Score updated 27 Oct 2026 · analysis from 25 May 2026
AWI· Industrials
Armstrong World Industries
Armstrong's 19.9% ROIC is impressive, but its 4.61% earnings yield suggests the stock may be overpriced.
Buffett fit
Partial fit
Owner
61
Durability
95
Management
50
Price
32
Score updated 27 Oct 2026 · analysis from 25 May 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Industrials stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned Armstrong, I'd focus on maintaining its strong of 19.9% while ensuring that continues to grow, as evidenced by a 33.75% year-over-year increase.
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Armstrong has shown remarkable durability with consistent profitability over the last five years, evidenced by a 0.0% max EPS decline.
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The management has reduced share count by 2.17% over the last five years, indicating a commitment to returning value to shareholders.
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With an yield of 3.72% and a of 21.7, the stock appears expensive compared to the ideal entry point of 8-10%.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 1 of 19.9% exceeds the sector's top-quintile cutoff of 11.1%, indicating strong capital efficiency.
- 2 of 27.5% is significantly above the sector average of 17.0%, showcasing operational strength.
- 3Net margin of 18.6% positions the company well within the top-quintile of its sector, reflecting effective cost management.
- 4Five-year revenue CAGR of 10.01% indicates robust growth potential in the construction sector.
Concerns
5- 1 of 40.3% is below the sector's top-quintile cutoff of 43.7%, suggesting competitive pressure.
- 2 yield of 3.72% indicates the stock may be overvalued relative to its earnings.
- 3Valuation metrics like of 21.7 and EV/ of 16.5 suggest the stock is priced for high growth that may not materialize.
- 4Management quality score of 50 reflects uncertainty about their long-term effectiveness.
Price history
$165+56.0%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Armstrong World Industries generates revenue through the design and manufacture of ceiling systems, primarily for residential and commercial buildings. In the last twelve months, the company generated $1.62 billion in revenue, with a net income of $308.7 million. Its diverse product offerings cater to various market segments, enhancing its stability and growth potential.
How this analysis has moved
The call has held across 6 reviews.
Sep 27, 2026 → Oct 27, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Industrials
Questions about Armstrong World Industries
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