Installed Building Products (NYSE:IBP) vs. Advanced Drainage Systems (NYSE:WMS) Financial Contrast

Installed Building Products (NYSE:IBP) and Advanced Drainage Systems (NYSE:WMS) are both construction companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, institutional ownership, profitability, valuation and earnings.

Insider & Institutional Ownership

99.6% of Installed Building Products shares are held by institutional investors. Comparatively, 89.8% of Advanced Drainage Systems shares are held by institutional investors. 16.2% of Installed Building Products shares are held by company insiders. Comparatively, 1.6% of Advanced Drainage Systems shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Installed Building Products and Advanced Drainage Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Installed Building Products	8.93%	43.71%	14.58%
Advanced Drainage Systems	15.75%	27.72%	12.31%

Analyst Recommendations

This is a breakdown of current recommendations for Installed Building Products and Advanced Drainage Systems, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Installed Building Products	2	9	1	0	1.92
Advanced Drainage Systems	0	1	7	0	2.88

Installed Building Products currently has a consensus target price of $259.70, indicating a potential downside of 12.94%. Advanced Drainage Systems has a consensus target price of $190.29, indicating a potential upside of 24.67%. Given Advanced Drainage Systems’ stronger consensus rating and higher possible upside, analysts plainly believe Advanced Drainage Systems is more favorable than Installed Building Products.

Earnings and Valuation

This table compares Installed Building Products and Advanced Drainage Systems”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Installed Building Products	$2.97 billion	2.71	$265.40 million	$9.73	30.66
Advanced Drainage Systems	$2.90 billion	4.09	$450.17 million	$6.01	25.40

Advanced Drainage Systems has lower revenue, but higher earnings than Installed Building Products. Advanced Drainage Systems 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.

Volatility & Risk

Installed Building Products has a beta of 1.97, indicating that its stock price is 97% more volatile than the S&P 500. Comparatively, Advanced Drainage Systems has a beta of 1.37, indicating that its stock price is 37% more volatile than the S&P 500.

Dividends

Installed Building Products pays an annual dividend of $1.56 per share and has a dividend yield of 0.5%. Advanced Drainage Systems pays an annual dividend of $0.72 per share and has a dividend yield of 0.5%. Installed Building Products pays out 16.0% of its earnings in the form of a dividend. Advanced Drainage Systems pays out 12.0% 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. Advanced Drainage Systems has raised its dividend for 1 consecutive years.

Summary

Installed Building Products beats Advanced Drainage Systems on 9 of the 17 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 Advanced Drainage Systems

Advanced Drainage Systems, Inc. designs, manufactures, and markets thermoplastic corrugated pipes and related water management products in North America and internationally. The company operates through Pipe, International, Infiltrator, and Allied Products & Other segments. It offers single, double, and triple wall corrugated polypropylene and polyethylene pipes; plastic leachfield chambers and systems; EZflow synthetic aggregate bundles; wastewater purification through mechanical aeration wastewater for residential and commercial systems; septic tanks and accessories; combined treatment and dispersal systems, including advanced enviro-septic and advanced treatment leachfield systems; and allied products, including storm retention/detention and septic chambers, polyvinyl chloride drainage structures, fittings, and water quality filters and separators. The company also purchases and distributes construction fabrics and other geosynthetic products for soil stabilization, reinforcement, filtration, separation, erosion control, and sub-surface drainage, as well as drainage grates and other products. In addition, it provides PVC hubs, rubber sleeves, and stainless-steel bands. The company offers its products for non-residential, residential, agriculture, and infrastructure applications through a network of distribution centers. Advanced Drainage Systems, Inc. incorporated in 1966 and is headquartered in Hilliard, Ohio.