Tecnoglass (TGLS)

Glass and windows manufacturer Tecnoglass (NYSE:TGLS) fell short of the markets revenue expectations in Q3 CY2025, but sales rose 9.3% year on year to $260.5 million. The company’s full-year revenue guidance of $980 million at the midpoint came in 2.2% below analysts’ estimates. Its non-GAAP profit of $1 per share was 9.7% below analysts’ consensus estimates.

Company Overview

The first-ever Colombian company to trade on the NASDAQ, Tecnoglass (NYSE:TGLS) is a manufacturer of architectural glass, windows, and aluminum products.

Traditionally, building materials companies have built competitive advantages with economies of scale, brand recognition, and strong relationships with builders and contractors. More recently, advances to address labor availability and job site productivity have spurred innovation. Additionally, companies in the space that can produce more energy-efficient materials have opportunities to take share. However, these companies are at the whim of construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates. Additionally, the costs of raw materials can be driven by a myriad of worldwide factors and greatly influence the profitability of building materials companies.

Other companies in the glass, windows, and aluminum industries include Saint-Gobain (EPA:SGO), Apogee (NASDAQ:APOG), and privately held company Oldcastle BuildingEvelope.

Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Tecnoglass grew its sales at an incredible 21.2% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers, a helpful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Tecnoglass’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 7.3% over the last two years was well below its five-year trend.

We can better understand the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Tecnoglass’s backlog reached $1.3 billion in the latest quarter and averaged 25% year-on-year growth over the last two years. Because this number is better than its revenue growth, we can see the company accumulated more orders than it could fulfill and deferred revenue to the future. This could imply elevated demand for Tecnoglass’s products and services but raises concerns about capacity constraints.

This quarter, Tecnoglass’s revenue grew by 9.3% year on year to $260.5 million, missing Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 9.8% over the next 12 months, an improvement versus the last two years. This projection is noteworthy and indicates its newer products and services will fuel better top-line performance.

Tecnoglass has best-in-class unit economics for an industrials company, enabling it to invest in areas such as research and development. Its margin also signals it sells differentiated products, not commodities. As you can see below, it averaged an elite 44.5% gross margin over the last five years. Said differently, roughly $44.52 was left to spend on selling, marketing, R&D, and general administrative overhead for every $100 in revenue.

Tecnoglass’s gross profit margin came in at 42.7% this quarter, down 3.1 percentage points year on year. On a wider time horizon, however, Tecnoglass’s full-year margin has been trending up over the past 12 months, increasing by 1.8 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as manufacturing expenses).

Tecnoglass has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 27.3%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Looking at the trend in its profitability, Tecnoglass’s operating margin rose by 4.2 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Tecnoglass generated an operating margin profit margin of 25.1%, down 3.3 percentage points year on year. Since Tecnoglass’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Tecnoglass’s EPS grew at an astounding 40.1% compounded annual growth rate over the last five years, higher than its 21.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Tecnoglass’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Tecnoglass’s operating margin declined this quarter but expanded by 4.2 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Tecnoglass, its two-year annual EPS declines of 3.2% mark a reversal from its (seemingly) healthy five-year trend. These shorter-term results weren’t ideal, but given it was successful in other measures of financial health, we’re hopeful Tecnoglass can return to earnings growth in the future.

In Q3, Tecnoglass reported adjusted EPS of $1, down from $1.08 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects Tecnoglass’s full-year EPS of $4 to grow 14.6%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Tecnoglass has shown robust cash profitability, enabling it to comfortably ride out cyclical downturns while investing in plenty of new offerings and returning capital to investors. The company’s free cash flow margin averaged 12.4% over the last five years, quite impressive for an industrials business.

Taking a step back, we can see that Tecnoglass’s margin dropped by 10.4 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.

Tecnoglass’s free cash flow clocked in at $21.23 million in Q3, equivalent to a 8.2% margin. This cash profitability was in line with the comparable period last year but below its five-year average. We wouldn’t read too much into it because investment needs can be seasonal, causing short-term swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Tecnoglass’s five-year average ROIC was 30.4%, placing it among the best industrials companies. This illustrates its management team’s ability to invest in highly profitable ventures and produce tangible results for shareholders.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. On average, Tecnoglass’s ROIC increased by 1.3 percentage points annually over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.

Businesses that maintain a cash surplus face reduced bankruptcy risk.

Tecnoglass is a profitable, well-capitalized company with $127.1 million of cash and $111.9 million of debt on its balance sheet. This $15.17 million net cash position gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We struggled to find many positives in these results. Its full-year EBITDA guidance missed and its revenue fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 1.8% to $54.90 immediately following the results.

Updated: December 3, 2025 at 10:07 PM EST

Before deciding whether to buy Tecnoglass or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

Tecnoglass doesn’t top our investment wishlist, but we understand that it’s not a bad business. First off, its revenue growth was exceptional over the last five years. And while Tecnoglass’s projected EPS for the next year is lacking, its backlog growth has been marvelous.

Tecnoglass’s P/E ratio based on the next 12 months is 12.8x. This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $74 on the company (compared to the current share price of $50.89).