AAON (NASDAQ: AAON) and Beacon Roofing Supply (NASDAQ:BECN) are both mid-cap construction companies, but which is the superior business? We will compare the two businesses based on the strength of their profitabiliy, dividends, institutional ownership, analyst recommendations, valuation, earnings and risk.

Profitability

This table compares AAON and Beacon Roofing Supply’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AAON 13.43% 25.28% 19.93%
Beacon Roofing Supply 2.37% 9.42% 3.93%

Risk & Volatility

AAON has a beta of 0.95, meaning that its share price is 5% less volatile than the S&P 500. Comparatively, Beacon Roofing Supply has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for AAON and Beacon Roofing Supply, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AAON 0 0 1 0 3.00
Beacon Roofing Supply 0 3 4 0 2.57

AAON currently has a consensus target price of $30.00, suggesting a potential downside of 21.26%. Beacon Roofing Supply has a consensus target price of $51.00, suggesting a potential upside of 2.57%. Given Beacon Roofing Supply’s higher probable upside, analysts plainly believe Beacon Roofing Supply is more favorable than AAON.

Institutional & Insider Ownership

66.0% of AAON shares are owned by institutional investors. 22.3% of AAON shares are owned by company insiders. Comparatively, 0.8% of Beacon Roofing Supply shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares AAON and Beacon Roofing Supply’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
AAON $384.63 million 5.21 $91.19 million $0.96 39.69
Beacon Roofing Supply $4.20 billion 0.71 $361.26 million $1.63 30.50

Beacon Roofing Supply has higher revenue and earnings than AAON. Beacon Roofing Supply is trading at a lower price-to-earnings ratio than AAON, indicating that it is currently the more affordable of the two stocks.

Dividends

AAON pays an annual dividend of $0.26 per share and has a dividend yield of 0.7%. Beacon Roofing Supply does not pay a dividend. AAON pays out 27.1% of its earnings in the form of a dividend.

Summary

AAON beats Beacon Roofing Supply on 9 of the 16 factors compared between the two stocks.

AAON Company Profile

AAON, Inc. is engaged in the engineering, manufacturing, marketing and sale of air conditioning and heating equipment consisting of standard, semi-custom and custom rooftop units, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps and coils. Its products serve the commercial and industrial new construction and replacement markets. Its rooftop and condensing unit markets consist of units installed on commercial or industrial structures of less than 10 stories in height. Its air handling units, self-contained units, geothermal/water-source heat pumps, chillers, packaged outdoor mechanical rooms and coils are applicable to all sizes of commercial and industrial buildings. The replacement market consists of products installed to replace existing units/components that are worn or damaged.

Beacon Roofing Supply Company Profile

Beacon Roofing Supply, Inc. is engaged in the distribution of residential and non-residential roofing materials in the United States and Canada. It also distributes complementary building products for residential and non-residential building exteriors. Its product portfolio includes residential roofing products, non-residential roofing products and complementary building products. The residential roofing products include asphalt shingles, clay tile, slate and metal roofing, among others. The non-residential roofing products include single-ply roofing, asphalt, metal, modified bitumen and build-up roofing, among others. The complementary building products include vinyl siding, fiber cement siding, stone veneer and windows, among others. The Company offers its products under various trade names, including Alabama Roofing Supply, Atlantic Building Products, Applicators Sales, Southern Roof Center, Statewide Wholesale, Structural Materials and The Roof Center.

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