Trex (NYSE:TREX) versus Owens Corning (NYSE:OC) Critical Review

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Trex	14.68%	18.03%	11.76%
Owens Corning	-6.81%	20.52%	6.21%

Institutional & Insider Ownership

96.0% of Trex shares are held by institutional investors. Comparatively, 88.4% of Owens Corning shares are held by institutional investors. 0.9% of Trex shares are held by insiders. Comparatively, 0.9% of Owens Corning shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Trex and Owens Corning”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Trex	$1.17 billion	3.97	$190.41 million	$1.68	26.69
Owens Corning	$10.10 billion	0.90	-$522.00 million	($8.06)	-14.20

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

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Trex and Owens Corning, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Trex	2	9	12	0	2.43
Owens Corning	3	5	7	3	2.56

Trex presently has a consensus price target of $50.19, suggesting a potential upside of 11.93%. Owens Corning has a consensus price target of $145.57, suggesting a potential upside of 27.21%. Given Owens Corning’s stronger consensus rating and higher probable upside, analysts clearly believe Owens Corning is more favorable than Trex.

Risk and Volatility

Trex has a beta of 1.48, meaning that its share price is 48% more volatile than the S&P 500. Comparatively, Owens Corning has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500.

Summary

Trex beats Owens Corning on 10 of the 15 factors compared between the two stocks.

About Trex

Trex Company, Inc. manufactures and distributes composite decking, railing, and outdoor living products and accessories for residential and commercial markets in the United States. It offers decking products and accessories under the names Trex Transcend, Trex Select, Trex Signature, Trex Transcend Lineage, and Trex Enhance for protection against fading, staining, mold, and scratching; Trex Hideaway, a hidden fastening system; and Trex DeckLighting, a LED dimmable deck lighting for use on posts, floors, and steps. The company also provides Trex Transcend Railing products that are used in Trex decking products and other decking materials; Trex Select Railing products for a simple clean finished look; Trex Enhance Railing system; Trex Signature aluminum railing for a contemporary look; and Trex Select T-Rail railing products. In addition, it offers Trex Seclusions, a fencing product that includes structural posts, bottom and top rails, pickets, and decorative post caps. Further, the company acts as a licensor in various licensing agreements with third parties to manufacture and sell products under the Trex name, including Trex Outdoor Furniture; Trex RainEscape, an above joist deck drainage system; Trex Pergola, a cellular PVC product; Trex Latticeworks outdoor lattice boards; Trex Cornhole boards; Diablo Trex Blade, a saw blade for wood-alternative composite decking; Trex SpiralStairs and structural steel posts; and Trex Outdoor Kitchens, cabinetry, and Storage products. It sells its products through wholesale distributors, retail lumber dealers, and Home Depot and Lowe’s stores. Trex Company, Inc. was founded in 1996 and is headquartered in Winchester, Virginia.

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.