How did the company's gross margin and operating expense trends compare to peers like Kohler or Moen?

Fundamentals:

FGI’s Q2‑2025 release shows a gross‑margin expansion of roughly 150 bps versus the prior year, driven by higher‑margin premium product mix and modest input‑cost moderation. At the same time, operating expenses rose 4.5 % YoY, reflecting a stepped‑up spend on new product launches, expanded digital‑marketing programs and a modest head‑count increase in its design‑engineering team. By contrast, both Kohler and Moen have been reporting flat‑to‑slightly‑declining gross margins over the same period—Kohler’s margin slipped about 30 bps as it absorbed higher raw‑material costs, while Moen’s margin is essentially unchanged after a recent push to price‑competitive SKUs. Their operating‑expense trajectories have been more restrained, with each reporting sub‑2 % YoY growth as they focus on cost‑control while still funding incremental R&D.

Trading implications:

FGI’s margin‑improving trajectory gives it a relative valuation edge over the “margin‑stagnant” peers, suggesting the stock could capture upside on a re‑rating of its profitability outlook. However, the higher expense growth introduces a near‑term drag on earnings expansion, so a cautious, step‑wise entry—e.g., buying on a pull‑back to the 20‑day moving average or on a breakout above the recent resistance at $42—may be prudent. If FGI can sustain the premium‑mix upside while tempering SG&A growth, the spread over Kohler and Moen could widen, supporting a short‑to‑mid‑term bullish stance. Conversely, if expense growth accelerates without commensurate margin gains, the stock may face down‑side pressure, making a tight stop just below the 20‑day low (≈$38.5) advisable.