Owens Corning (NYSE:OC) and Fortune Brands Home & Security (NYSE:FBHS) are both construction companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, analyst recommendations, risk, institutional ownership, dividends, valuation and earnings.
Earnings and Valuation
This table compares Owens Corning and Fortune Brands Home & Security's gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Owens Corning | $7.16 billion | 1.19 | $405 million | $4.54 | 17.85 |
Fortune Brands Home & Security | $5.76 billion | 2.00 | $431.90 million | $3.60 | 23.09 |
Fortune Brands Home & Security has lower revenue, but higher earnings 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.
Volatility and Risk
Owens Corning has a beta of 1.54, indicating that its share price is 54% more volatile than the S&P 500. Comparatively, Fortune Brands Home & Security has a beta of 1.66, indicating that its share price is 66% more volatile than the S&P 500.
Profitability
This table compares Owens Corning and Fortune Brands Home & Security's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Owens Corning | -7.94% | 11.99% | 4.98% |
Fortune Brands Home & Security | 8.36% | 22.37% | 8.68% |
Dividends
Owens Corning pays an annual dividend of $1.04 per share and has a dividend yield of 1.3%. Fortune Brands Home & Security pays an annual dividend of $0.96 per share and has a dividend yield of 1.2%. Owens Corning pays out 22.9% of its earnings in the form of a dividend. Fortune Brands Home & Security pays out 26.7% 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. Owens Corning has raised its dividend for 1 consecutive years and Fortune Brands Home & Security has raised its dividend for 1 consecutive years. Owens Corning is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Recommendations
This is a breakdown of current ratings and price targets for Owens Corning and Fortune Brands Home & Security, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Owens Corning | 1 | 12 | 8 | 0 | 2.33 |
Fortune Brands Home & Security | 1 | 4 | 10 | 0 | 2.60 |
Owens Corning presently has a consensus price target of $113.60, indicating a potential upside of 40.21%. Fortune Brands Home & Security has a consensus price target of $87.4375, indicating a potential upside of 5.17%. Given Owens Corning's higher possible upside, equities analysts plainly believe Owens Corning is more favorable than Fortune Brands Home & Security.
Insider and Institutional Ownership
91.2% of Owens Corning shares are owned by institutional investors. Comparatively, 86.6% of Fortune Brands Home & Security shares are owned by institutional investors. 1.5% of Owens Corning shares are owned by insiders. Comparatively, 1.5% of Fortune Brands Home & Security shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Summary
Fortune Brands Home & Security beats Owens Corning on 9 of the 16 factors compared between the two stocks.