Installed Building Products (NYSE: IBP) and Foundation Building Materials (NYSE:FBM) are both small-cap construction companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, dividends, valuation, analyst recommendations, institutional ownership, risk and profitability.

Earnings & Valuation

This table compares Installed Building Products and Foundation Building Materials’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Installed Building Products $997.23 million 1.86 $121.83 million $1.30 44.73
Foundation Building Materials $1.89 billion 0.29 $108.42 million N/A N/A

Installed Building Products has higher revenue, but lower earnings than Foundation Building Materials.

Insider and Institutional Ownership

65.6% of Installed Building Products shares are held by institutional investors. Comparatively, 92.1% of Foundation Building Materials shares are held by institutional investors. 32.9% of Installed Building Products shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for Installed Building Products and Foundation Building Materials, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Installed Building Products 0 0 4 0 3.00
Foundation Building Materials 0 2 7 0 2.78

Installed Building Products currently has a consensus price target of $63.25, suggesting a potential upside of 8.77%. Foundation Building Materials has a consensus price target of $18.43, suggesting a potential upside of 43.86%. Given Foundation Building Materials’ higher possible upside, analysts clearly believe Foundation Building Materials is more favorable than Installed Building Products.

Profitability

This table compares Installed Building Products and Foundation Building Materials’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Installed Building Products 4.11% 25.27% 7.46%
Foundation Building Materials N/A N/A N/A

Summary

Installed Building Products beats Foundation Building Materials on 7 of the 11 factors compared between the two stocks.

About Installed Building Products

Installed Building Products, Inc. is a holding company. The Company is a residential insulation installer in the United States. As of December 31, 2016, the Company’s national platform included over 100 locations accessing customers in 48 continental states and the District of Columbia. The Company also installs complementary building products, including garage doors, rain gutters, shower doors, closet shelving and mirrors, which provides cross-selling opportunities to supplement the insulation installation business. The Company manages various aspects of the installation process for the customers, from the direct purchase and receipt of materials from national manufacturers, to supply of materials to job sites and quality installation. The Company’s customers include production and custom homebuilders, multi-family and commercial contractors, and homeowners.

About Foundation Building Materials

Foundation Building Materials, Inc. is a specialty distributor of wallboard and suspended ceiling systems in the United States and Canada. The Company’s segments include Specialty Building Products and Mechanical Insulation. The Company fabricates and distributes its products for specialty contractors seeking to improve or maintain energy efficiency in a range of commercial and industrial buildings. It serves markets across the United States and in Canada. Specialty building products segment distributes wallboard and accessories, metal framing, suspended ceiling systems and other products. Other products include stucco and Exterior insulation and finish system (EIFS), as well as offerings, such as tools, safety accessories and fasteners. Its Mechanical insulation segment includes insulation solutions for pipes and mechanical systems and the primary end markets served are new non-residential construction, non- residential repair and remodel construction and industrial markets.

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