Comparing Installed Building Products (NYSE:IBP) and Armstrong World Industries (NYSE:AWI)

Installed Building Products (NYSE:IBP) and Armstrong World Industries (NYSE:AWI) are both mid-cap construction companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, risk, dividends and earnings.

Profitability

This table compares Installed Building Products and Armstrong World Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Installed Building Products	8.45%	60.27%	13.91%
Armstrong World Industries	19.08%	38.97%	17.14%

Volatility & Risk

Installed Building Products has a beta of 1.83, suggesting that its stock price is 83% more volatile than the S&P 500. Comparatively, Armstrong World Industries has a beta of 1.45, suggesting that its stock price is 45% more volatile than the S&P 500.

Insider and Institutional Ownership

99.6% of Installed Building Products shares are held by institutional investors. Comparatively, 98.9% of Armstrong World Industries shares are held by institutional investors. 16.2% of Installed Building Products shares are held by insiders. Comparatively, 1.0% of Armstrong World Industries shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Installed Building Products and Armstrong World Industries”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Installed Building Products	$2.94 billion	2.31	$256.60 million	$8.99	27.64
Armstrong World Industries	$1.60 billion	5.16	$264.90 million	$6.99	27.29

Armstrong World Industries has lower revenue, but higher earnings than Installed Building Products. Armstrong World Industries 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.

Analyst Ratings

This is a breakdown of current ratings for Installed Building Products and Armstrong World Industries, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Installed Building Products	3	11	2	0	1.94
Armstrong World Industries	0	4	5	1	2.70

Installed Building Products presently has a consensus price target of $220.45, suggesting a potential downside of 11.29%. Armstrong World Industries has a consensus price target of $207.50, suggesting a potential upside of 8.76%. Given Armstrong World Industries’ stronger consensus rating and higher possible upside, analysts plainly believe Armstrong World Industries is more favorable than Installed Building Products.

Dividends

Installed Building Products pays an annual dividend of $1.48 per share and has a dividend yield of 0.6%. Armstrong World Industries pays an annual dividend of $1.35 per share and has a dividend yield of 0.7%. Installed Building Products pays out 16.5% of its earnings in the form of a dividend. Armstrong World Industries pays out 19.3% 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. Armstrong World Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Armstrong World Industries beats Installed Building Products on 10 of the 18 factors compared between the two stocks.

About Installed Building Products

Installed Building Products, Inc., together with its subsidiaries, engages in the installation of insulation, waterproofing, fire-stopping, fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving and mirrors, and other products in the United States. It operates through Installation, Distribution, and Manufacturing operation segments. The company offers a range of insulation materials, such as fiberglass and cellulose, and spray foam insulation materials. It is also involved in the installation of insulation and sealant materials in various areas of a structure, which includes basement and crawl space, building envelope, attic, and acoustical applications. In addition, the company installs a range of caulk and sealant products that control air infiltration in residential and commercial buildings; and waterproofing options, including sheet and hot applied waterproofing membranes, as well as deck coating, bentonite, and air and vapor systems. Further, it distributes spray foam insulation, metal building insulation, residential insulation, and mechanical and fabricated Styrofoam insulation, as well as accessories and equipment used in the insulation installation process; and manufactures cellulose insulation and specialty industrial fibers. It serves homebuilders, multi-family and commercial and agricultural construction firms, individual homeowners, and repair and remodeling contractors. The company was formerly known as CCIB Holdco, Inc. Installed Building Products, Inc. was founded in 1977 and is based in Columbus, Ohio.

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.