Masco (NYSE:MAS) versus Owens Corning (NYSE:OC) Critical Review

Owens Corning (NYSE:OC) and Masco (NYSE:MAS) are both large-cap construction companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, risk, earnings, dividends, analyst recommendations, institutional ownership and profitability.

Dividends

Owens Corning pays an annual dividend of $3.16 per share and has a dividend yield of 2.1%. Masco pays an annual dividend of $1.28 per share and has a dividend yield of 1.6%. Owens Corning pays out -47.8% of its earnings in the form of a dividend. Masco pays out 31.8% 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 and Masco has raised its dividend for 12 consecutive years. Owens Corning is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Owens Corning has a beta of 1.3, suggesting that its stock price is 30% more volatile than the S&P 500. Comparatively, Masco has a beta of 1.28, suggesting that its stock price is 28% more volatile than the S&P 500.

Earnings & Valuation

This table compares Owens Corning and Masco”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	1.20	-$522.00 million	($6.61)	-22.85
Masco	$7.56 billion	2.18	$810.00 million	$4.03	20.31

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

Insider & Institutional Ownership

88.4% of Owens Corning shares are owned by institutional investors. Comparatively, 93.9% of Masco shares are owned by institutional investors. 0.9% of Owens Corning shares are owned by company insiders. Comparatively, 0.6% of Masco shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Owens Corning and Masco’s 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%
Masco	10.90%	815.20%	16.32%

Analyst Ratings

This is a summary of recent ratings and price targets for Owens Corning and Masco, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Owens Corning	1	5	9	1	2.62
Masco	1	10	8	0	2.37

Owens Corning presently has a consensus price target of $150.58, suggesting a potential downside of 0.29%. Masco has a consensus price target of $80.07, suggesting a potential downside of 2.18%. Given Owens Corning’s stronger consensus rating and higher probable upside, research analysts plainly believe Owens Corning is more favorable than Masco.

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 Masco

Masco Corporation designs, manufactures, and distributes home improvement and building products in North America, Europe, and internationally. The company's Plumbing Products segment offers faucets, showerheads, handheld showers, valves, bath hardware and accessories, bathing units, shower bases and enclosures, sinks, toilets, acrylic tubs, shower trays, spas, exercise pools, and fitness systems; brass, copper, and composite plumbing system components; connected water products; thermoplastic solutions, extruded plastic profiles, specialized fabrications, and PEX tubing products; and other non-decorative plumbing products. This segment provides its products under the DELTA, BRIZO, PEERLESS, HANSGROHE, AXOR, KRAUS, EASY DRAIN, STEAMIST, ELITESTEAM, GINGER, NEWPORT BRASS, BRASSTECH, WALTEC, BRISTAN, HERITAGE, MIROLIN, HOT SPRING, CALDERA, FREEFLOW SPAS, FANTASY SPAS, ENDLESS POOLS, BRASSCRAFT, PLUMB SHOP, COBRA, COBRA PRO, and MASTER PLUMBER brands. Its Decorative Architectural Products segment offers paints, primers, specialty coatings, stains, and waterproofing products, as well as paint applicators and accessories; cabinet and door hardware, functional hardware, wall plates, hook and rail products, closet organization systems, and picture hanging accessories; decorative bath hardware, mirrors, and shower accessories and doors; and decorative indoor and outdoor lighting fixtures, ceiling fans, landscape lighting, and LED lighting systems. This segment provides its products under the BEHR, KILZ, WHIZZ, Elder & Jenks, LIBERTY, BRAINERD, FRANKLIN BRASS, KICHLER, and ÉLAN brands. It sells its products to the plumbing, heating, and hardware wholesalers; home centers and online retailers; hardware stores; electrical and landscape distributors; lighting showrooms; building supply outlets; and other mass merchandisers. Masco Corporation was incorporated in 1929 and is headquartered in Livonia, Michigan.