Critical Survey: Installed Building Products (IBP) vs. TopBuild Corp. (BLD)
Installed Building Products (NYSE: IBP) and TopBuild Corp. (NYSE:BLD) are both mid-cap construction companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, profitability, risk and valuation.
Risk and Volatility
Installed Building Products has a beta of 0.83, meaning that its stock price is 17% less volatile than the S&P 500. Comparatively, TopBuild Corp. has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500.
This is a breakdown of current ratings and target prices for Installed Building Products and TopBuild Corp., as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Installed Building Products||0||1||4||0||2.80|
Installed Building Products currently has a consensus price target of $66.25, indicating a potential downside of 0.60%. TopBuild Corp. has a consensus price target of $56.20, indicating a potential downside of 13.15%. Given Installed Building Products’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Installed Building Products is more favorable than TopBuild Corp..
Earnings and Valuation
This table compares Installed Building Products and TopBuild Corp.’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Installed Building Products||$997.23 million||2.13||$121.83 million||$1.30||51.27|
|TopBuild Corp.||$1.81 billion||1.30||$158.32 million||$1.80||35.95|
TopBuild Corp. has higher revenue and earnings than Installed Building Products. TopBuild Corp. 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.
Institutional & Insider Ownership
65.5% of Installed Building Products shares are held by institutional investors. Comparatively, 91.8% of TopBuild Corp. shares are held by institutional investors. 32.9% of Installed Building Products shares are held by company insiders. Comparatively, 1.3% of TopBuild Corp. shares are held by company 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.
This table compares Installed Building Products and TopBuild Corp.’s 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%|
Installed Building Products beats TopBuild Corp. on 10 of the 14 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 TopBuild Corp.
TopBuild Corp. installs and distributes insulation products to the United States construction industry. The Company operates through two segments: Installation (TruTeam) and Distribution (Service Partners). Its Installation segment principally includes the sales and installation of insulation and other building products. Its Distribution segment includes the distribution of insulation and other building products. As of December 31, 2016, the Company provided insulation installation services through its TruTeam contractor services business, which had over 175 installation branches located in 41 states. It installs various insulation applications, which include fiberglass batts and rolls and blown-in loose fill fiberglass. As of December 31, 2016, the Company distributed insulation and other building products, including rain gutters, fireplaces, closet shelving, and roofing materials through its Service Partners business, which had over 70 distribution centers located in 33 states.
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