Installed Building (IBP) Up 67% in 3 Months: Will It Sustain?
Installed Building Products, Inc. IBP spiked 66.9% over the past three months, broadly outperforming the Zacks Building Products - Miscellaneous industry’s 24.1% growth, the Zacks Construction sector’s 23.1% increase and the S&P 500 Index’s 9.2% rise.
This residential insulation installer has been gaining from strong end-market demand and proficient acquisition strategies. Also, its national scale and diverse product categories, as well as end markets, are added positives.
Currently carrying a Zacks Rank #2 (Buy), the company’s earnings for 2024 have moved upward to $10.84 per share from $10.51 over the past 60 days. The estimated figure indicates 7.2% year-over-year growth. This positive trend signifies bullish analysts’ sentiments, indicating robust fundamentals and the expectation of outperformance in the near term.
We believe that IBP offers a sound investment opportunity, as evidenced by its VGM Score of A. Our research shows that stocks with a VGM Score of A or B, along with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities to investors.
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Let us delve deeper into the substantiating factors that make this stock a profitable pick for investors.
Acquisitions & Divestures
Acquisitions are an essential part of Installed Building Products’ growth strategy. Buyouts lead to the diversification of the company’s geographies, end markets and products. IBP maintains a robust pipeline of acquisition candidates that consider the geographic expansion in the core residential insulation end market and acquisition opportunities that continue end-market and end-product diversification strategies.
in December 2023, IBP strengthened its market presence with the buyout of Combee Insulation Company, Inc., Combee Foam Products, Inc. and Air Tight Diagnostics, LLC. This move, in line with its growth strategy, significantly expanded its footprint in Central Florida, catering to single-family, multifamily and commercial customers. IBP's 2023 acquisition spree, totaling around $75 million in annual revenues, showcases its commitment to sustained growth.
Higher Market Demand
The company has been capitalizing on the strong end-market demand and the continued success of local branches, which prudently align selling prices with the value IBP offers its customers.
Although interest rates continue to increase from historically low levels, the company remains optimistic, given the strong demand for installation services. IBP has been gaining from the continued benefits of its product, end-market and geographic diversification strategies, as softer single-family sales were partially offset by the continuation of robust sales growth in its multi-family end market.
Higher Return on Equity (ROE)
Installed Building Products’ trailing 12-month ROE is indicative of its growth potential. Its ROE for the trailing 12 months is 49.8%, much higher than the industry’s 11.2%, reflecting the company’s efficient usage of shareholders’ funds.
Other Key Picks
Some other top-ranked companies from the same space are:
Armstrong World Industries, Inc. AWI presently sports a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
AWI delivered a trailing four-quarter average earnings surprise of 7.9%. In the past 60 days, the Zacks Consensus Estimate for its 2024 earnings has moved up to $5.48 per share from $5.47.
Arcosa, Inc. ACA currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 45%.
In the past 60 days, the Zacks Consensus Estimate for Arcosa’s 2024 earnings increased to $3.38 per share from $3.34.
Hillman Solutions Corp. HLMN currently carries a Zacks Rank #2.
That said, HLMN’s 2024 EPS estimate has increased to 42 cents from 41 cents over the past seven days.
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Armstrong World Industries, Inc. (AWI) : Free Stock Analysis Report
Installed Building Products, Inc. (IBP) : Free Stock Analysis Report
Arcosa, Inc. (ACA) : Free Stock Analysis Report
Hillman Solutions Corp. (HLMN) : Free Stock Analysis Report
