Tecnoglass (TGLS)

Glass and windows manufacturer Tecnoglass (NYSE:TGLS) reported Q4 CY2025 results topping the market’s revenue expectations, with sales up 2.4% year on year to $245.3 million. The company’s full-year revenue guidance of $1.10 billion at the midpoint came in 1.1% above analysts’ estimates. Its non-GAAP profit of $0.63 per share was 25.2% 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.

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Tecnoglass’s 21.2% annualized revenue growth over the last five years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Tecnoglass’s annualized revenue growth of 8.6% over the last two years is below its five-year trend, but we still think the results were respectable.

This quarter, Tecnoglass reported modest year-on-year revenue growth of 2.4% but beat Wall Street’s estimates by 1.7%.

Looking ahead, sell-side analysts expect revenue to grow 9.7% over the next 12 months, similar to its two-year rate. This projection is admirable and suggests its newer products and services will catalyze better top-line performance.

Tecnoglass has bad unit economics for an industrials company, giving it less room to reinvest and develop new offerings. As you can see below, it averaged a 23.3% gross margin over the last five years. Said differently, Tecnoglass had to pay a chunky $76.68 to its suppliers for every $100 in revenue.

Tecnoglass’s gross profit margin was negative 298% this quarter. The company’s full-year margin was also negative, suggesting it needs to change its business model quickly.

Tecnoglass’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 27.1% over the last five years. This profitability was elite for an industrials business thanks to its efficient cost structure and economies of scale. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Analyzing the trend in its profitability, Tecnoglass’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Tecnoglass generated an operating margin profit margin of 18.3%, down 9.8 percentage points year on year. Since Tecnoglass’s gross margin decreased more than its operating margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, R&D, and administrative overhead expenses.

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 34.9% 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 to better understand the drivers of its performance. A five-year view shows that Tecnoglass has repurchased its stock, shrinking its share count by 1.1%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

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 5.2% mark a reversal from its (seemingly) healthy five-year trend. We hope Tecnoglass can return to earnings growth in the future.

In Q4, Tecnoglass reported adjusted EPS of $0.63, down from $1.05 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 $3.58 to grow 13.3%.

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 11.9% over the last five years, quite impressive for an industrials business.

Taking a step back, we can see that Tecnoglass’s margin dropped by 9.7 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 $11.44 million in Q4, equivalent to a 4.7% margin. The company’s cash profitability regressed as it was 10.1 percentage points lower than in the same quarter last year, suggesting its historical struggles have dragged on.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Tecnoglass hasn’t been the highest-quality company lately, it found a few growth initiatives in the past that worked out wonderfully. Its five-year average ROIC was 30.5%, splendid for an industrials business.

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. Over the last few years, Tecnoglass’s ROIC has unfortunately decreased. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Tecnoglass reported $104.1 million of cash and $171.6 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $291.3 million of EBITDA over the last 12 months, we view Tecnoglass’s 0.2× net-debt-to-EBITDA ratio as safe. We also see its $789,000 of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was encouraging to see Tecnoglass beat analysts’ revenue expectations this quarter. We were also glad its full-year revenue guidance slightly exceeded Wall Street’s estimates. On the other hand, its full-year EBITDA guidance missed and its EBITDA fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 1% to $48.60 immediately after reporting.

Updated: February 26, 2026 at 7:15 AM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Tecnoglass.

Tecnoglass isn’t a bad business, but we’re not clamoring to buy it here and now. First off, its revenue growth was exceptional over the last five years. And while Tecnoglass’s diminishing returns show management's prior bets haven't worked out, its backlog growth has been marvelous.

Tecnoglass’s P/E ratio based on the next 12 months is 12.1x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $71.50 on the company (compared to the current share price of $48.60).