JELD-WEN Holding (JELD): A risky bet on a struggling builder

With a stock price plummeting by 73% within a year, JELD-WEN Holding (NYSE: JELD) has become a prime example of the prevailing pessimism in the market. The company, known for its production of windows and doors, has witnessed a significant decline in its valuation due to various factors such as weak construction demand, operational challenges, and an annual tariff expense of $30 million. Despite these setbacks, there is a contrarian perspective emerging that suggests the potential for a turnaround, considering the deeply discounted stock price, strategic restructuring efforts, and increased institutional investment. The question that arises is whether investing in JELD-WEN is a risk worth taking.

A primary area of concern for JELD-WEN has been its declining revenue in recent years. Starting from a peak of $4.3 billion in 2023, the revenue has declined to $3.77 billion in 2024 and further dropped to $3.59 billion over the trailing twelve months as of early 2025. The first quarter of 2025 reflected a 19% year-over-year decrease in revenue, with the company’s major markets in North America and Europe experiencing declines of 22% and 12%, respectively. These downward trends can be attributed to various factors such as the sale of the Towanda, PA facility for $115 million in January 2025, unfavorable macroeconomic conditions impacting construction activities, and the impact of tariffs on Canadian wood imports, leading to increased costs and margin pressures. However, JELD-WEN has responded to these challenges by focusing on cost-cutting measures, eliminating $100 million in expenses, and strategic divestitures to emphasize its core business. The company is also emphasizing high-margin, energy-efficient products, which constitute 80% of the demand for eco-friendly materials by builders.

In terms of valuation, JELD-WEN appears to be a discounted asset compared to its peers in the industry. With a price-to-earnings (P/E) ratio of 7.7x based on its projected earnings, the company is trading at a significant discount relative to companies like Masco Corp (MAS) and Lowe’s (LOW). However, investor skepticism persists due to concerns about JELD-WEN’s ability to stabilize its margins and manage its debt, which amounts to $1.1 billion. The low valuation also reflects expectations of a prolonged downturn in the housing market, although an improvement in construction demand could potentially lead to a revenue rebound for JELD-WEN.

One promising aspect for JELD-WEN is the impact of U.S. trade policies, particularly the tariffs on Canadian softwood imports. While these tariffs have posed challenges in the short term, they have the potential to weaken JELD-WEN’s Asian competitors who dominate low-cost imports. Furthermore, the company’s shift towards domestic sourcing for fiberglass doors could enhance its margins by deterring cheaper imports. Additionally, JELD-WEN stands to benefit from U.S. energy policies that promote energy-efficient construction materials, aligning with the company’s product focus on energy-efficient doors, which represent 40% of its North American sales.

Institutional investors have shown confidence in JELD-WEN through significant purchasing activity. Turtle Creek Asset Management, a major shareholder with a 10% stake, invested $103.7 million in JELD-WEN shares towards the end of 2024 and an additional $13.6 million in early 2025. Onex Corporation’s substantial $675 million holding in the company serves as a testament to the long-term prospects of JELD-WEN. While insider transactions have predominantly been in the form of grants tied to compensation rather than indicative of bullish sentiment, Turtle Creek’s acquisitions at discounted prices suggest a belief in the company’s value potential.

Despite the positive indicators, JELD-WEN faces risks such as the burden of its existing debt, potential challenges in meeting earnings expectations, and the impact of weak demand, especially in the U.S. and European construction markets. A sustained downturn in the construction sector could necessitate further restructurings, including layoffs or plant closures.

For investors willing to take a high-risk, high-reward approach, JELD-WEN presents an enticing opportunity with several factors to consider:

1. Valuation: At a modest P/E ratio of 7.7x forward earnings, the stock offers a margin of safety if earnings stabilize.
2. Strategic Shifts: Efforts towards cost reduction and focus on energy-efficient products could lead to improved margins.
3. Institutional Backing: Strong support from major investors like Turtle Creek and Onex indicates confidence in the company’s long-term prospects.

However, caution is advised due to the following considerations:
– A recovery period of 1-2 years may be needed.
– Exposure to macroeconomic and policy risks.
– The potential for further declines if construction demand remains subdued.

In conclusion