Tecnoglass (TGLS)

Glass and windows manufacturer Tecnoglass (NYSE:TGLS) announced better-than-expected revenue in Q1 CY2025, with sales up 15.4% year on year to $222.3 million. The company expects the full year’s revenue to be around $990 million, close to analysts’ estimates. Its non-GAAP profit of $0.92 per share was 12.2% above 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 17.5% compounded annual growth rate. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great 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 annualized revenue growth of 8.3% over the last two years is below its five-year trend, but we still think the results were respectable.

This quarter, Tecnoglass reported year-on-year revenue growth of 15.4%, and its $222.3 million of revenue exceeded Wall Street’s estimates by 3.3%.

Looking ahead, sell-side analysts expect revenue to grow 7% over the next 12 months, similar to its two-year rate. This projection is underwhelming and suggests its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

Gross profit margin is a critical metric to track because it sheds light on its pricing power, complexity of products, and ability to procure raw materials, equipment, and labor.

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 44.3% gross margin over the last five years. That means Tecnoglass only paid its suppliers $55.66 for every $100 in revenue.

Tecnoglass produced a 43.9% gross profit margin in Q1, up 5.1 percentage points year on year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

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 7.1 percentage points over the last five years, as its sales growth gave it immense operating leverage.

This quarter, Tecnoglass generated an operating profit margin of 26.7%, up 5.4 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Tecnoglass’s EPS grew at an astounding 43.8% compounded annual growth rate over the last five years, higher than its 17.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into the nuances of Tecnoglass’s earnings can give us a better understanding of its performance. As we mentioned earlier, Tecnoglass’s operating margin expanded by 7.1 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes and interest expenses 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, EPS didn’t budge over the last two years, a regression from its five-year trend. Given the merits in other parts of its business, we’re hopeful it can revert to earnings growth in the coming years.

In Q1, Tecnoglass reported EPS at $0.92, up from $0.66 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Tecnoglass’s full-year EPS of $3.91 to grow 6.4%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Tecnoglass has shown terrific cash profitability, putting it in an advantageous position to invest in new products, return capital to investors, and consolidate the market during industry downturns. The company’s free cash flow margin was among the best in the industrials sector, averaging 14.7% over the last five years.

Taking a step back, we can see that Tecnoglass’s margin dropped by 11.5 percentage points during that time. It may have ticked higher more recently, but shareholders are likely hoping for its margin to at least revert to its historical level. If the longer-term trend returns, it could signal increasing investment needs and capital intensity.

Tecnoglass’s free cash flow clocked in at $16.47 million in Q1, equivalent to a 7.4% margin. The company’s cash profitability regressed as it was 4.8 percentage points lower than in the same quarter last year, which isn’t ideal considering its longer-term trend.

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 29.6%, 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. Tecnoglass’s ROIC has increased significantly 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.

One of the best ways to mitigate bankruptcy risk is to hold more cash than debt.

Tecnoglass is a profitable, well-capitalized company with $160.2 million of cash and $109 million of debt on its balance sheet. This $51.12 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 enjoyed seeing Tecnoglass beat analysts’ revenue expectations this quarter. We were also glad its EBITDA outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 2.8% to $72.69 immediately following the results.

Updated: May 15, 2025 at 11:00 PM EDT

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

Tecnoglass possesses a number of positive attributes. First off, its revenue growth was exceptional over the last five years. And while its cash profitability fell over the last five years, its impressive operating margins show it has a highly efficient business model. On top of that, its expanding operating margin shows the business has become more efficient.

Tecnoglass’s P/E ratio based on the next 12 months is 20.3x. Looking at the industrials landscape right now, Tecnoglass trades at a pretty interesting price. If you believe in the company and its growth potential, now is an opportune time to buy shares.

Wall Street analysts have a consensus one-year price target of $86 on the company (compared to the current share price of $84.40).

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

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