Analyst Has 'Buy' Rating on Armstrong

New York, NY, Sept. 24, 2010--Analyst Stifel Nicolaus has maintained its "buy" rating on Armstrong World Industries after the company announced reorganization of its European operations.

The company is closing two of its four European plants and will now only operate two plants in Germany, exiting Swedish and English facilities.

Armstrong will also cease production of heterogeneous vinyl flooring and only manufacture homogeneous vinyl in its German facility.

The English plant serviced the residential vinyl market.

"We estimate the company is vacating or walking away from roughly 10% of its European sales or roughly $30 million," the analyst said, noting that the European business unit was a "long-standing" underperformer.

Armstrong will still manufacture linoleum and homogeneous vinyl that will service the commercial marketplace in Europe. Stifel Nicolaus said that substantial losses have been generated by trying to service the residential end market and by manufacturing heterogeneous vinyl.

In addition, Armstrong will produce fiberglass backed vinyl in Lancaster, Pennsylvania, instead of Europe, which should also cut costs, Stifel said.