Headwaters (NYSE: HW) and Continental Building Products (NYSE:CBPX) are both cyclical consumer goods & services companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitabiliy, analyst recommendations, dividends, institutional ownership, valuation and risk.

Profitability

This table compares Headwaters and Continental Building Products’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Headwaters 1.98% 5.96% 1.68%
Continental Building Products 9.30% 15.57% 7.64%

Earnings & Valuation

This table compares Headwaters and Continental Building Products’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Headwaters N/A N/A N/A $0.56 43.29
Continental Building Products $470.51 million 1.88 $132.24 million $1.08 20.83

Continental Building Products has higher revenue and earnings than Headwaters. Continental Building Products is trading at a lower price-to-earnings ratio than Headwaters, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Headwaters has a beta of 1.7, suggesting that its stock price is 70% more volatile than the S&P 500. Comparatively, Continental Building Products has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for Headwaters and Continental Building Products, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Headwaters 1 8 1 0 2.00
Continental Building Products 0 4 2 0 2.33

Headwaters presently has a consensus price target of $22.79, suggesting a potential downside of 5.97%. Continental Building Products has a consensus price target of $25.00, suggesting a potential upside of 11.11%. Given Continental Building Products’ stronger consensus rating and higher possible upside, analysts clearly believe Continental Building Products is more favorable than Headwaters.

Institutional & Insider Ownership

86.8% of Headwaters shares are owned by institutional investors. Comparatively, 97.4% of Continental Building Products shares are owned by institutional investors. 6.4% of Headwaters shares are owned by company insiders. Comparatively, 0.3% of Continental Building Products shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Continental Building Products beats Headwaters on 9 of the 11 factors compared between the two stocks.

About Headwaters

Headwaters Incorporated is a building materials company operating in the building products and construction materials sectors. The Company sells building products, such as manufactured architectural stone, siding accessory products, roof products and concrete block. The Company’s operating segments include building products, construction materials and energy technology. It also markets coal combustion products (CCPs), including fly ash, which is used as a partial replacement for Portland cement in concrete. The Building Products segment is engaged in designing, manufacturing and marketing of siding accessories used in residential repair and remodeling, and new residential construction applications. The Materials segment markets fly ash in the construction materials sector. The Energy Technology segment is involved in heavy oil upgrading processes through the sale of its HCAT catalyst material. It sells catalytic materials to certain refineries engaged in heavy oil upgrading.

About Continental Building Products

Continental Building Products, Inc. is a manufacturer of gypsum wallboard and complementary finishing products. The Company operates through wallboard segment. Gypsum wallboard is a primary building material used in residential and commercial construction and in repair and remodel (R&R). It offers customers a range of gypsum wallboard products, including LiftLite, its lightweight product designed to lift and install; its Mold Defense line of products designed for protection against mold and mildew, and its Weather Defense line of moisture and mold-resistant exterior sheathing. The Company also operates a finishing products business that manufactures a line of joint compounds at its plant in Silver Grove (Kentucky) and its joint compound plant in Chambly (Quebec). The Company manufactures gypsum wallboard related products for commercial and residential buildings and houses. The Company’s manufacturing facilities are concentrated in the eastern United States and eastern Canada.

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