1. Trex is under investigation for potential federal law violations. 2. Disappointing Q3 results led to a 31% drop in share price. 3. Sales growth guidance revised down to nearly 0% for FY 2025. 4. Trex aimed for 5%-7% sales growth earlier this year. 5. The investigation may lead to shareholder litigation.
FAQ
Why Very Bearish?
The significant drop in shares due to disappointing earnings suggests ongoing investor mistrust, akin to past examples where earnings misses led to similar drops, indicating long-term confidence could be shaken furthe.
How important is it?
The investigation directly involves Trex, with potential for legal implications that could affect future earnings.
Why Short Term?
The ongoing investigation coupled with earnings deltas will likely affect short-term performance but may stabilize if corrective actions are taken.
The law firm of Kirby McInerney LLP reminds investors its investigation on behalf of Trex Company, Inc. ("Trex" or the "Company") (NYSE:TREX) investors concerning the Company's and/or members of its senior management's possible violation of the federal securities laws or other unlawful business practices.
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What Happened?
On August 2025, Trex assured investors that "our revised inventory strategy reduces the volatility typically associated with channel stocking and de-stocking" and "by level-loading our production, we can better manage inventory cycles, enhance operational efficiencies, and reduce volatility in our quarterly results." The company also called for FY 2025 sales growth of 5% to 7%.
But after the markets closed on November 4, 2025, Trex surprised investors when it reported disappointing Q3 2025 financial results with net sales of $285 million coming in 5% below the mid-point of its guidance (significantly missing analysts' consensus estimates), a sequential decline of about 26%. The company also reported a 12% decline in net income per share for the nine months ended September 30, 2025, compared to the prior year periods. In addition, Trex said it expects a "muted" fourth quarter, explaining in part "we expect our pro channel partners to lower their inventories through the rest of the year" and revised its 2025 sales growth guidance down to roughly 0% compared to 2024. On this news, the price of Trex shares declined by $14.61 per share, or approximately 31.07%, from $47.04 per share on November 4, 2025 to close at $32.43 on November 5, 2025.
What Should I Do?
If you purchased or otherwise acquired Trex securities, have information, or would like to learn more about this investigation, please contact Lauren Molinaro of Kirby McInerney LLP by email at investigations@kmllp.com, or fill out the contact form below, to discuss your rights or interests with respect to these matters at no cost.
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Kirby McInerney LLP is a New York-based plaintiffs' law firm concentrating in securities, antitrust, whistleblower, and consumer litigation. The firm's efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling billions of dollars. Additional information about the firm can be found at Kirby McInerney LLP's website.
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Kirby McInerney LLP
Lauren Molinaro, Esq.
212-699-1171
https://www.kmllp.com
https://securitiesleadplaintiff.com/
investigations@kmllp.com