Vulcan Materials (NYSE: VMC) and USG Corporation (NYSE:USG) are both mid-cap construction companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Risk and Volatility

Vulcan Materials has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500. Comparatively, USG Corporation has a beta of 1.08, meaning that its stock price is 8% more volatile than the S&P 500.

Institutional & Insider Ownership

84.9% of Vulcan Materials shares are owned by institutional investors. Comparatively, 89.3% of USG Corporation shares are owned by institutional investors. 0.9% of Vulcan Materials shares are owned by insiders. Comparatively, 0.7% of USG Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Vulcan Materials pays an annual dividend of $1.00 per share and has a dividend yield of 0.9%. USG Corporation does not pay a dividend. Vulcan Materials pays out 32.4% of its earnings in the form of a dividend. Vulcan Materials has raised its dividend for 3 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Vulcan Materials and USG Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vulcan Materials 0 3 5 0 2.63
USG Corporation 2 11 5 0 2.17

Vulcan Materials currently has a consensus price target of $138.60, suggesting a potential upside of 21.46%. USG Corporation has a consensus price target of $31.00, suggesting a potential upside of 20.25%. Given Vulcan Materials’ stronger consensus rating and higher probable upside, analysts clearly believe Vulcan Materials is more favorable than USG Corporation.

Profitability

This table compares Vulcan Materials and USG Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Vulcan Materials 11.28% 8.72% 4.48%
USG Corporation 14.94% 13.57% 6.20%

Earnings & Valuation

This table compares Vulcan Materials and USG Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Vulcan Materials $3.70 billion 4.08 $940.88 million $3.09 36.93
USG Corporation $3.08 billion 1.20 $487.00 million $3.10 8.32

Vulcan Materials has higher revenue and earnings than USG Corporation. USG Corporation is trading at a lower price-to-earnings ratio than Vulcan Materials, indicating that it is currently the more affordable of the two stocks.

Summary

Vulcan Materials beats USG Corporation on 9 of the 16 factors compared between the two stocks.

About Vulcan Materials

Vulcan Materials Company is a supplier of construction aggregates (primarily crushed stone, sand and gravel) and a producer of asphalt mix and ready-mixed concrete. The Company operates through four segments: Aggregates, Asphalt Mix, Concrete and Calcium. The Aggregates segment produces and sells aggregates (crushed stone, sand and gravel, sand, and other aggregates) and related products and services (transportation and other). The Company produces and sells asphalt mix in Arizona, California, New Mexico and Texas. The Company produces and sells ready-mixed concrete in Georgia, Maryland, New Mexico, Texas, Virginia, Washington District of Columbia and the Bahamas. The Calcium segment consists of a Florida facility that mines, produces and sells calcium products. As of December 31, 2016, it had 337 active aggregates facilities. The Company sells aggregates that are used as ballast for construction and maintenance of railroad tracks.

About USG Corporation

USG Corporation, through its subsidiaries, is a manufacturer and distributor of building materials. The Company’s segments include Gypsum, Ceilings and USG Boral Building Products (UBBP). It produces a range of products for use in new residential, new nonresidential, and residential and nonresidential repair and remodel construction, as well as products used in certain industrial processes. Its products are distributed through building materials dealers, home improvement centers and other retailers, specialty wallboard distributors, and contractors. Gypsum segment manufactures and markets gypsum and related products in the United States, Canada, Mexico and Latin America. Ceilings segment manufactures and markets interior systems products in the United States, Canada, Mexico and Latin America. The UBBP segment manufactures, distributes and sells certain building products, mines raw gypsum and sells natural and synthetic gypsum throughout Asia, Australasia and the Middle East.

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