Critical Contrast: Owens Corning (NYSE:OC) vs. Quanex Building Products (NYSE:NX)

Owens Corning (NYSE:OC) and Quanex Building Products (NYSE:NX) are both construction companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, valuation, analyst recommendations, profitability, dividends, institutional ownership and risk.

Earnings & Valuation

This table compares Owens Corning and Quanex Building Products”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Owens Corning	$10.10 billion	1.27	-$522.00 million	($6.61)	-24.02
Quanex Building Products	$1.84 billion	0.47	-$250.81 million	($5.63)	-3.31

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

Volatility and Risk

Owens Corning has a beta of 1.34, meaning that its stock price is 34% more volatile than the S&P 500. Comparatively, Quanex Building Products has a beta of 0.91, meaning that its stock price is 9% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for Owens Corning and Quanex Building Products, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Owens Corning	1	5	9	1	2.63
Quanex Building Products	2	0	1	0	1.67

Owens Corning presently has a consensus price target of $150.58, indicating a potential downside of 5.15%. Quanex Building Products has a consensus price target of $28.00, indicating a potential upside of 50.21%. Given Quanex Building Products’ higher probable upside, analysts plainly believe Quanex Building Products is more favorable than Owens Corning.

Profitability

This table compares Owens Corning and Quanex Building Products’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Owens Corning	-5.43%	19.86%	6.32%
Quanex Building Products	-13.85%	11.11%	4.07%

Dividends

Owens Corning pays an annual dividend of $3.16 per share and has a dividend yield of 2.0%. Quanex Building Products pays an annual dividend of $0.32 per share and has a dividend yield of 1.7%. Owens Corning pays out -47.8% of its earnings in the form of a dividend. Quanex Building Products pays out -5.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Owens Corning has raised its dividend for 10 consecutive years. Owens Corning is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

88.4% of Owens Corning shares are owned by institutional investors. Comparatively, 97.5% of Quanex Building Products shares are owned by institutional investors. 0.9% of Owens Corning shares are owned by insiders. Comparatively, 1.9% of Quanex Building Products shares are owned 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.

Summary

Owens Corning beats Quanex Building Products on 12 of the 18 factors compared between the two stocks.

About Owens Corning

Owens Corning manufactures and sells building and construction materials in the United States, Europe, the Asia Pacific, and internationally. It operates in three segments: Roofing, Insulation, and Composites. The Roofing segment manufactures and sells laminate and strip asphalt roofing shingles, oxidized asphalt materials, and roofing components used in residential and commercial construction, and specialty applications. This segment sells its products through distributors, home centers, and lumberyards, as well as to roofing contractors for built-up roofing asphalt systems; and manufacturers in automotive, chemical, rubber, and construction industries. The Insulation segment manufactures and sells thermal and acoustical batts, loosefill insulation, spray foam insulation, foam sheathing and accessories under the Owens Corning PINK, and FIBERGLAS brands; and glass fiber pipe insulation, energy efficient flexible duct media, bonded and granulated mineral wool insulation, cellular glass insulation, and foam insulation under the FOAMULAR, FOAMGLAS, and Paroc brand names used in construction applications. This segment sells its products primarily to the insulation installers, home centers, lumberyards, retailers, and distributors. The Composites segment manufactures, fabricates, and sells glass reinforcements in the form of fiber; and glass fiber products in the form of fabrics, non-wovens, and composite lumber. Its products are used in building structures, roofing shingles, tubs and showers, pools, decking, flooring, pipes and tanks, poles, electrical equipment, and wind-energy turbine blades. This segment sells its products directly to parts molders, fabricators, and shingle manufacturers. The company was incorporated in 1938 and is headquartered in Toledo, Ohio.

About Quanex Building Products

Quanex Building Products Corporation, together with its subsidiaries, provides components for the fenestration industry in the United States, rest of Europe, Canada, Asia, the United Kingdom, and internationally. The company operates through three segments: North American Fenestration, European Fenestration, and North American Cabinet Components. It offers flexible insulating glass spacers, extruded vinyl profiles, window and door screens, and precision-formed metal and wood products, as well as cabinet doors and other components for original equipment manufacturers (OEMs) in the kitchen and bathroom cabinet industry. In addition, the company provides various non-fenestration components and products, including solar panel sealants, trim moldings, vinyl decking, fencing, water retention barriers, and conservatory roof components. It sells its products to OEMs in the building products industry through sales representatives, direct sales force, distributors, and independent sales agents. Quanex Building Products Corporation was founded in 1927 and is based in Houston, Texas.