Trex (TREX) versus Installed Building Products (NYSE:IBP) Critical Analysis
Trex (NYSE: TREX) and Installed Building Products (NYSE:IBP) are both construction companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitabiliy, institutional ownership, risk and earnings.
This is a breakdown of current ratings for Trex and Installed Building Products, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Installed Building Products||0||0||4||0||3.00|
Trex presently has a consensus target price of $71.75, indicating a potential downside of 9.29%. Installed Building Products has a consensus target price of $56.50, indicating a potential downside of 1.65%. Given Installed Building Products’ stronger consensus rating and higher probable upside, analysts clearly believe Installed Building Products is more favorable than Trex.
Risk and Volatility
Trex has a beta of 2.36, meaning that its share price is 136% more volatile than the S&P 500. Comparatively, Installed Building Products has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500.
Insider & Institutional Ownership
92.2% of Trex shares are held by institutional investors. Comparatively, 63.7% of Installed Building Products shares are held by institutional investors. 1.0% of Trex shares are held by insiders. Comparatively, 32.9% of Installed Building Products shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Earnings & Valuation
This table compares Trex and Installed Building Products’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Trex||$504.24 million||4.61||$131.61 million||$2.58||30.66|
|Installed Building Products||$926.95 million||1.97||$110.12 million||$1.30||44.19|
Trex has higher revenue, but lower earnings than Installed Building Products. Trex is trading at a lower price-to-earnings ratio than Installed Building Products, indicating that it is currently the more affordable of the two stocks.
This table compares Trex and Installed Building Products’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Installed Building Products||4.11%||26.45%||8.18%|
Trex beats Installed Building Products on 8 of the 14 factors compared between the two stocks.
Trex Company, Inc. is a manufacturer of wood-alternative decking and railing products. The Company’s products are marketed under the brand name Trex and are manufactured in the United States. It offers a set of outdoor living products in the decking, railing, porch, fencing, trim, steel deck framing and outdoor lighting categories. Its decking products include Trex Transcend, Trex Enhance and Trex Select. The Company’s railing products include Trex Transcend Railing, Trex Select Railing and Trex Signature aluminum railing. It offers Trex Transcend Porch Flooring and Railing System, which is an integrated system of porch components and accessories. The Company offers Trex Seclusions fencing product, which consists of structural posts, bottom rail, pickets, top rail and decorative post caps. It offers a triple-coated steel deck framing system called Trex Elevations. The Company also offers outdoor lighting systems, such as Trex DeckLighting and Trex Landscape Lighting.
About Installed Building Products
Installed Building Products, Inc. is a holding company. The Company is a residential insulation installer in the United States. As of December 31, 2016, the Company’s national platform included over 100 locations accessing customers in 48 continental states and the District of Columbia. The Company also installs complementary building products, including garage doors, rain gutters, shower doors, closet shelving and mirrors, which provides cross-selling opportunities to supplement the insulation installation business. The Company manages various aspects of the installation process for the customers, from the direct purchase and receipt of materials from national manufacturers, to supply of materials to job sites and quality installation. The Company’s customers include production and custom homebuilders, multi-family and commercial contractors, and homeowners.
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