Head to Head Analysis: Owens Corning (NYSE:OC) & Armstrong World Industries (NYSE:AWI)

Armstrong World Industries (NYSE:AWI) and Owens Corning (NYSE:OC) are both mid-cap construction companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, earnings, risk, profitability and valuation.

Risk & Volatility

Armstrong World Industries has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500. Comparatively, Owens Corning has a beta of 1.35, meaning that its share price is 35% more volatile than the S&P 500.

Dividends

Armstrong World Industries pays an annual dividend of $1.36 per share and has a dividend yield of 0.7%. Owens Corning pays an annual dividend of $2.76 per share and has a dividend yield of 2.5%. Armstrong World Industries pays out 19.5% of its earnings in the form of a dividend. Owens Corning pays out -48.3% 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. Armstrong World Industries has increased its dividend for 1 consecutive years and Owens Corning has increased 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.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Armstrong World Industries and Owens Corning, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Armstrong World Industries	0	4	5	1	2.70
Owens Corning	2	5	10	0	2.47

Armstrong World Industries presently has a consensus target price of $207.50, indicating a potential upside of 8.58%. Owens Corning has a consensus target price of $155.58, indicating a potential upside of 39.11%. Given Owens Corning’s higher possible upside, analysts plainly believe Owens Corning is more favorable than Armstrong World Industries.

Earnings & Valuation

This table compares Armstrong World Industries and Owens Corning”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Armstrong World Industries	$1.45 billion	5.70	$264.90 million	$6.99	27.34
Owens Corning	$10.98 billion	0.84	$647.00 million	($5.72)	-19.55

Owens Corning has higher revenue and earnings than Armstrong World Industries. Owens Corning is trading at a lower price-to-earnings ratio than Armstrong World Industries, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Armstrong World Industries and Owens Corning’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Armstrong World Industries	19.08%	38.97%	17.14%
Owens Corning	-4.46%	24.42%	8.53%

Institutional & Insider Ownership

98.9% of Armstrong World Industries shares are owned by institutional investors. Comparatively, 88.4% of Owens Corning shares are owned by institutional investors. 1.0% of Armstrong World Industries shares are owned by insiders. Comparatively, 0.8% of Owens Corning shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Armstrong World Industries beats Owens Corning on 10 of the 18 factors compared between the two stocks.

About Armstrong World Industries

Armstrong World Industries, Inc., together with its subsidiaries, engages in the design, manufacture, and sale of ceiling and wall solutions in the Americas. It operates through Mineral Fiber and Architectural Specialties segments. The company offers mineral fiber, fiberglass wool, metal, wood, felt, wood fiber, and glass-reinforced-gypsum; ceiling component products, such as ceiling perimeters and trims, as well as grid products that support drywall ceiling systems; ceilings, walls, and facades for use in commercial settings; and manufactures ceiling suspension system (grid) products. It serves commercial and residential construction markets, as well as renovation of existing buildings sectors. The company sells its products to resale distributors, ceiling system contractors, wholesalers, and retailers comprising large home centers. Armstrong World Industries, Inc. was founded in 1860 and is headquartered in Lancaster, Pennsylvania.

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.