Why Quanex Stock Rallied Today
Key Points
Quanex is facing a slew of macroeconomic challenges.
Yet the company continues to crank out cash.
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Shares of Quanex Building Products (NYSE: NX) popped on Friday after the manufacturer of window, door, and cabinet components delivered larger-than-expected profits in its fiscal fourth quarter.
As of 1:57 p.m. EST, Quanex's stock price was up more than 10%.
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Quanex produced robust cash flow in a difficult economic environment
Quanex's sales declined less than 1% year over year to $489.8 million in the quarter ended Oct. 31.
"Inflationary pressures, political instability, high interest rates, tariff uncertainty, housing affordability issues, and geopolitical tensions collectively weakened consumer confidence around the world, causing our end markets to decline meaningfully as compared to 2024," CEO George Wilson said in a press release.
Despite these challenges, Quanex's adjusted earnings per share rose 1% to $0.83. That bested Wall Street's estimates, which had called for per-share profits of $0.51.
Moreover, Quanex generated $66.6 million in free cash flow, compared to negative $8.2 million in the prior-year quarter. For the 12 months ended Oct. 31, the company's free cash flow nearly doubled to $102.3 million.
"We continue to be encouraged by the overall resilience of the business in the current environment, demonstrated by our strong cash flow, which enabled us to repay a total of $75 million in bank debt in 2025," Wilson said.
Quanex intends to use its excess cash to buy back its shares
Wilson declined to give official guidance for fiscal 2026, but he's currently planning for revenue and adjusted earnings to be flat compared to fiscal 2025.
"As macroeconomic uncertainty subsides and consumer confidence improves, we believe our team is well positioned to capitalize on pent-up demand," Wilson said. "In the meantime, we will stay focused on the things that we can control, with an emphasis on generating cash to continue paying down debt and opportunistically repurchasing our stock."
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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