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

Profitability

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

Net Margins Return on Equity Return on Assets
Continental Building Products 9.16% 15.45% 7.55%
Installed Building Products 4.11% 25.27% 7.46%

Institutional and Insider Ownership

65.6% of Installed Building Products shares are held by institutional investors. 0.3% of Continental Building Products shares are held by insiders. Comparatively, 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 Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Continental Building Products 0 2 1 0 2.33
Installed Building Products 0 0 4 0 3.00

Continental Building Products presently has a consensus price target of $26.50, indicating a potential upside of 8.83%. Installed Building Products has a consensus price target of $63.25, indicating a potential upside of 5.68%. Given Continental Building Products’ higher probable upside, analysts clearly believe Continental Building Products is more favorable than Installed Building Products.

Valuation & Earnings

This table compares Continental Building Products and Installed Building Products’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Continental Building Products $474.02 million 1.97 $131.29 million $1.09 22.34
Installed Building Products $997.23 million 1.90 $121.83 million $1.30 46.04

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

Volatility and Risk

Continental Building Products has a beta of 1.26, suggesting that its share price is 26% more volatile than the S&P 500. Comparatively, Installed Building Products has a beta of 0.8, suggesting that its share price is 20% less volatile than the S&P 500.

Summary

Installed Building Products beats Continental Building Products on 8 of the 14 factors compared between the two stocks.

Continental Building Products Company Profile

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.

Installed Building Products Company Profile

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.

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