Simpson Manufacturing (NYSE: SSD) and Continental Building Products (NYSE:CBPX) are both construction companies, but which is the better stock? We will contrast the two companies based on the strength of their profitability, valuation, risk, analyst recommendations, institutional ownership, earnings and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
Simpson Manufacturing 10.78% 10.26% 8.96%
Continental Building Products 9.16% 15.45% 7.55%

Earnings and Valuation

This table compares Simpson Manufacturing and Continental Building Products’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Simpson Manufacturing $914.03 million 2.27 $171.24 million $2.05 21.41
Continental Building Products $474.02 million 1.81 $131.29 million $1.09 20.46

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

Risk and Volatility

Simpson Manufacturing has a beta of 1.41, indicating that its share price is 41% more volatile than the S&P 500. Comparatively, Continental Building Products has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Simpson Manufacturing and Continental Building Products, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Simpson Manufacturing 0 1 0 0 2.00
Continental Building Products 0 2 1 0 2.33

Continental Building Products has a consensus price target of $26.50, suggesting a potential upside of 18.83%. Given Continental Building Products’ stronger consensus rating and higher probable upside, analysts plainly believe Continental Building Products is more favorable than Simpson Manufacturing.

Dividends

Simpson Manufacturing pays an annual dividend of $0.84 per share and has a dividend yield of 1.9%. Continental Building Products does not pay a dividend. Simpson Manufacturing pays out 41.0% of its earnings in the form of a dividend. Continental Building Products has increased its dividend for 3 consecutive years.

Insider & Institutional Ownership

84.9% of Simpson Manufacturing shares are owned by institutional investors. Comparatively, 98.4% of Continental Building Products shares are owned by institutional investors. 0.4% of Simpson Manufacturing 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 company is poised for long-term growth.

Summary

Simpson Manufacturing beats Continental Building Products on 10 of the 17 factors compared between the two stocks.

About Simpson Manufacturing

Simpson Manufacturing Co., Inc., through its subsidiary, Simpson Strong-Tie Company Inc. (SST), designs, engineers and manufactures wood construction products, including connectors, truss plates, fastening systems, fasteners and pre-fabricated lateral systems used in light-frame construction. The Company’s segments are North America, Europe, Asia/Pacific, and Administrative & All Other. The North America segment includes operations primarily in the United States and Canada. The Europe segment includes operations primarily in France, the United Kingdom, Germany, Denmark, Switzerland, Portugal, Poland, the Netherlands and Belgium. The Asia/Pacific segment includes operations primarily in Australia, New Zealand, South Africa, China, Taiwan and Vietnam. The Company manufactures concrete construction products used for concrete, masonry, steel construction and for concrete repair, protection and strengthening, including adhesives, chemicals and mechanical anchors.

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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