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Why You Should Consider Buying Owens Corning (OC) Stock

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·5 min read
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Indeed, the ongoing inflation, supply chain disruptions and the regional impacts of the COVID-19 pandemic have been playing spoilsports for companies worldwide. Owens Corning OC is not an exception, with the stock losing 6.5% year to date but outperforming the Zacks Building Products - Miscellaneous industry’s 19.8% decline.

Owens Corning is one such company that continues to display strength in several areas. Hence, adding the stock to your portfolio should not be a disappointment. OC is among the building material producers that remain relatively well positioned, courtesy of strategic initiatives and stronger demand arising from commercial and industrial markets. Improved manufacturing leverage and strong cost controls have also been aiding OC to deliver solid margins.

Earnings estimates for 2022 and 2023 have moved up 8.1% and 3.1%, respectively, over the past 60 days. OC also has a solid earnings surprise history, having surpassed the Zacks Consensus Estimate in all the trailing 11 quarters. This positive trend signifies bullish analysts’ sentiments and justifies the company’s Zacks Rank #2 (Buy), indicating robust fundamentals and the expectation of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research
Zacks Investment Research


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Let us delve deeper into other factors that make this stock a profitable pick.

What Makes the Stock an Attractive Pick?

Strategic Efforts

Across the enterprise, the company continues to invest in selected growth and productivity initiatives to serve customers as well as improve the overall operating performance.

Segment-wise, in the Insulation business, technical and other building insulation businesses look strong on the back of geographic and product expansion through acquisitions. Also, in the North American residential fiberglass business, OC is utilizing automation and additional investments in process technology to improve manufacturing efficiencies as well as reduce costs. Additionally, the company continues to invest in new insulation materials and systems in nonresidential applications to expand its global product offerings.

In Composites, OC has a two-fold focus. First, it is focused on key markets and geographies where it has a market-leading position like North America, Europe, and India. Second, the company is focused on making the composite business the most cost-effective network, mainly focusing on productivity and manufacturing performance.

In the Roofing segment, Owens Corning is leveraging vertical integration, material science capabilities, and commercial strength to design as well as market unique roofing shingles and components that attract contractors, homeowners and distributors.

Acquisitions

The company is assessing its investment in bolt-on acquisitions that leverage its commercial, operational and geographic strength and expand its functional areas of offering. On Jul 13, 2021, OC announced the acquisition of vliepa GmbH. The acquisition broadened Owens Corning’s global nonwovens portfolio. vliepa specializes in the coating, printing and finishing of nonwovens, paper and film for the building materials industry.

Additionally, the acquisition of Paroc — a leading producer of mineral wool insulation for building and technical applications in Europe — enabled the company to expand its geographic scope in Europe and augment the portfolio in a bid to include insulation products in all three major markets — North America, Europe and China.

Value Stock & Solid Prospects

Historical data suggests that value stocks not only tend to outperform growth stocks but are relatively less volatile. Given that fundamentally-strong stocks are now available at a cheaper rate, it will be prudent for investors (specifically risk-averse investors) to grab a stock for long-term gains.

OC currently has a Value Score of A. Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best opportunities in the value investing space.

Its trailing 12-month forward price-to-earnings (P/E) ratio of just 7.95 is lower than the industry’s 12.76.

The company has solid prospects, as is evident from the Zacks Consensus Estimate for 2022 and 2023 earnings of $10.40 and $11.25 per share, which indicates 12% and 8.2% year-over-year growth, respectively.

Other Top-Ranked Stocks From the Broader Construction Sector

Tri Pointe Homes TPH currently holds a Zacks Rank #1. This Irvine, CA-based homebuilder has been gaining from higher pricing and improved operating leverage. Cost-cutting initiatives and focus on entry-level buyers have been adding to the positives.

Tri Pointe Homes’ earnings are expected to grow 20.9% in 2022.

AECOM ACM — a Zacks Rank #2 company — is a leading solutions provider delivering professional, technical and management solutions for diverse industries across end markets. ACM has been continuously focusing on delivering industry-leading margins and unlocking capital to promote growth as well as innovation. Also, focus on higher-margin and lower-risk Professional Services businesses bodes well.

Over the past 60 days, AECOM’s earnings estimates for fiscal 2022 have increased to $3.40 from $3.35. The projected figure indicates a 20.6% year-over-year rise.

Lennar Corporation LEN — a Zacks Rank #2 company — is a well-known homebuilder. The company is benefiting from effective cost control and focus on making its homebuilding platform more efficient, leading to higher operating leverage.

The consensus mark for LEN’s earnings for fiscal 2022 has increased to $16.43 from $15.82 per share over the past 30 days. Lennar’s earnings for fiscal 2022 are expected to rise 15.1% year over year.


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AECOM (ACM) : Free Stock Analysis Report

Lennar Corporation (LEN) : Free Stock Analysis Report

Owens Corning Inc (OC) : Free Stock Analysis Report

Tri Pointe Homes Inc. (TPH) : Free Stock Analysis Report

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