Fortune Brands Home & Security (NYSE:FBHS) and Owens Corning (NYSE:OC) are both industrial products companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, profitability and earnings.
Insider and Institutional Ownership
86.6% of Fortune Brands Home & Security shares are owned by institutional investors. Comparatively, 91.2% of Owens Corning shares are owned by institutional investors. 1.5% of Fortune Brands Home & Security shares are owned by company insiders. Comparatively, 1.5% of Owens Corning shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares Fortune Brands Home & Security and Owens Corning's revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Fortune Brands Home & Security | $5.76 billion | 2.06 | $431.90 million | $3.60 | 23.82 |
| Owens Corning | $7.16 billion | 1.18 | $405 million | $4.54 | 17.80 |
Fortune Brands Home & Security has higher earnings, but lower revenue than Owens Corning. Owens Corning is trading at a lower price-to-earnings ratio than Fortune Brands Home & Security, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Fortune Brands Home & Security and Owens Corning's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Fortune Brands Home & Security | 8.36% | 22.37% | 8.68% |
| Owens Corning | -7.94% | 11.99% | 4.98% |
Dividends
Fortune Brands Home & Security pays an annual dividend of $1.04 per share and has a dividend yield of 1.2%. Owens Corning pays an annual dividend of $1.04 per share and has a dividend yield of 1.3%. Fortune Brands Home & Security pays out 28.9% of its earnings in the form of a dividend. Owens Corning pays out 22.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Fortune Brands Home & Security has increased its dividend for 1 consecutive years and Owens Corning has increased its dividend for 1 consecutive years. Owens Corning is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk and Volatility
Fortune Brands Home & Security has a beta of 1.66, meaning that its share price is 66% more volatile than the S&P 500. Comparatively, Owens Corning has a beta of 1.54, meaning that its share price is 54% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of recent recommendations and price targets for Fortune Brands Home & Security and Owens Corning, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Fortune Brands Home & Security | 1 | 4 | 10 | 0 | 2.60 |
| Owens Corning | 2 | 12 | 7 | 0 | 2.24 |
Fortune Brands Home & Security presently has a consensus price target of $87.4375, suggesting a potential upside of 1.96%. Owens Corning has a consensus price target of $111.8095, suggesting a potential upside of 38.34%. Given Owens Corning's higher possible upside, analysts clearly believe Owens Corning is more favorable than Fortune Brands Home & Security.
Summary
Fortune Brands Home & Security beats Owens Corning on 9 of the 16 factors compared between the two stocks.
