Head to Head Analysis: AZEK (NYSE:AZEK) and AAON (NASDAQ:AAON)

AZEK (NYSE:AZEK) and AAON (NASDAQ:AAON) are both mid-cap construction companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, earnings, valuation, institutional ownership, risk, profitability and analyst recommendations.

Volatility & Risk

AZEK has a beta of 1.82, meaning that its stock price is 82% more volatile than the S&P 500. Comparatively, AAON has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500.

Valuation & Earnings

This table compares AZEK and AAON”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AZEK	$1.52 billion	5.14	$153.38 million	$1.02	53.28
AAON	$1.26 billion	5.27	$168.56 million	$1.90	42.97

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

Profitability

This table compares AZEK and AAON’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AZEK	9.92%	13.87%	8.63%
AAON	12.60%	20.23%	14.23%

Institutional & Insider Ownership

97.4% of AZEK shares are held by institutional investors. Comparatively, 70.8% of AAON shares are held by institutional investors. 3.2% of AZEK shares are held by company insiders. Comparatively, 18.7% of AAON shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for AZEK and AAON, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AZEK	0	10	7	0	2.41
AAON	0	0	4	1	3.20

AZEK presently has a consensus price target of $53.93, suggesting a potential downside of 0.77%. AAON has a consensus price target of $111.50, suggesting a potential upside of 36.56%. Given AAON’s stronger consensus rating and higher possible upside, analysts clearly believe AAON is more favorable than AZEK.

Summary

AAON beats AZEK on 10 of the 15 factors compared between the two stocks.

About AZEK

The AZEK Company Inc. engages in the design, manufacturing, and selling of building products for residential, commercial, and industrial markets in the United States and Canada. It operates through two segments: Residential and Commercial. The Residential segment designs and manufactures engineered outdoor living products, such as decking, railing, trim and molding, siding and cladding, pergolas and cabanas, and accessories under the TimberTech, AZEK Exteriors, VERSATEX, ULTRALOX, StruXure, and INTEX brands. The Commercial segment offers bathroom partitions, shower and dressing stalls, lockers and other storage solutions, and engineered plastic sheet products under the Aria, Eclipse, Hiny Hiders, TuffTec, and Duralife brands. This segment also offers bathroom partitions, shower and dressing stalls, lockers, storage solutions, extruded plastic sheet, and non-fabricated products under the Aria, Eclipse, Hiny Hiders, TuffTec, and Duralife brands. The company was formerly known as Delaware corporation and changed its name to The AZEK Company Inc. in June 2020. The AZEK Company Inc. was incorporated in 2013 and is headquartered in Chicago, Illinois.

About AAON

AAON, Inc., together with its subsidiaries, engages in engineering, manufacturing, marketing, and selling air conditioning and heating equipment in the United States and Canada. The company operates through three segments: AAON Oklahoma, AAON Coil Products, and BASX. It offers rooftop units, data center cooling solutions, cleanroom systems, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps, coils, and controls. The company markets and sells its products to retail, manufacturing, educational, lodging, supermarket, data centers, medical and pharmaceutical, and other commercial industries. It sells its products through a network of independent manufacturer representative organizations and internal sales force, as well as online. The company was incorporated in 1987 and is based in Tulsa, Oklahoma.