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Owens Corning (OC)
NYSE:OC
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Owens Corning
(NYSE:OC)
Rating:71Outperform
Price Target:
$158.00
▲( 16.92% Upside)
Positive Factors
Shareholder Returns
Management is committed to returning $2 billion or 100% of its free cash flow from 2025 to 2026 to shareholders, viewing its stock as undervalued.
Stock Repurchase
Owens Corning's Board has authorized 12 million shares for repurchase, capitalizing on the undervaluation of the stock.
Negative Factors
Insulation Segment Challenges
Some pressure on insulation prices, with insulation volumes falling 6% and sales falling 5%.
Tariff Impacts
The Doors business faces challenges from tariff impacts, with a net impact of $10M mostly affecting this segment.
Owens Corning (OC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.01B
Dividend Yield1.91%
Average Volume (3M)950.31K
Price to Earnings (P/E)50.7
Beta (1Y)1.30
Revenue Growth16.16%
EPS Growth-77.11%
CountryUS
Employees25,000
SectorIndustrials
Sector Strength90
IndustryConstruction
Share Statistics
EPS (TTM)2.97
Shares Outstanding85,052,530
10 Day Avg. Volume1,034,943
30 Day Avg. Volume950,307
Financial Highlights & Ratios
PEG Ratio-0.49
Price to Book (P/B)2.34
Price to Sales (P/S)0.00
P/FCF Ratio9.32
Enterprise Value/Market Cap1.40
Enterprise Value/Revenue0.41
Enterprise Value/Gross Profit5.14
Enterprise Value/Ebitda2.06
Forecast
1Y Price Target
$172.83Price Target Upside27.89% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering14
Owens Corning Business Overview & Revenue Model
Company DescriptionOwens Corning is a global leader in the building materials industry, specializing in the production of fiberglass composites, insulation, and roofing materials. The company operates through three primary segments: Composites, Insulation, and Roofing. Owens Corning's products are used in a wide range of applications, including residential and commercial construction, industrial processes, and transportation, providing innovative solutions that enhance energy efficiency and durability.
How the Company Makes MoneyOwens Corning generates revenue through the sale of its products across its three main segments: Composites, Insulation, and Roofing. In the Composites segment, the company manufactures and markets glass fiber reinforcements and other materials used in various industries, including automotive, wind energy, and electronics. The Insulation segment provides fiberglass insulation products that improve energy efficiency in residential and commercial buildings. The Roofing segment offers roofing shingles and related accessories to contractors and homeowners. Key revenue streams include direct sales to contractors, distributors, and retailers. The company benefits from strategic partnerships and a strong distribution network, which enhance its market reach and customer base. Additionally, Owens Corning invests in innovation and sustainability initiatives to maintain a competitive edge and meet evolving market demands.
Owens Corning Financial Statement Overview
Summary
Owens Corning exhibits strong financial performance with significant revenue growth and operational efficiency. Despite a decline in net income affecting net profit margins and return on equity, the balance sheet is strong with low leverage, and cash flow management is excellent, highlighted by a significant increase in free cash flow.Income Statement
Owens Corning has demonstrated robust revenue growth, rising from $9.68 billion in 2023 to $10.98 billion in 2024, marking a 13.3% increase. The gross profit margin for 2024 stands at 29.6%, showing strong profitability. However, the net profit margin has decreased to 5.9% from 12.4% in 2023, primarily due to decreased net income. EBIT and EBITDA margins are robust at 10.3%, reflecting solid operational efficiency.85
Very Positive
Balance Sheet
The balance sheet displays a sound equity base with a debt-to-equity ratio of 0.10, indicating low leverage. The equity ratio is strong at 36.1%, suggesting good financial stability. Return on equity has decreased to 12.7% from 23.2% in 2023, reflecting a reduction in profitability relative to equity.78
Positive
Cash Flow
Owens Corning showcases excellent cash flow management, with a free cash flow of $1.89 billion in 2024, a 58.6% increase from 2023. The operating cash flow to net income ratio is high, indicating strong cash generation relative to reported earnings. The free cash flow to net income ratio is exceptionally robust, highlighting efficient capital expenditure control.90
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 10.97B | 9.68B | 9.76B | 8.50B | 7.05B | Gross Profit |
| 3.25B | 2.68B | 2.62B | 2.22B | 1.61B | EBIT |
| 1.13B | 1.81B | 1.71B | 1.44B | 820.00M | EBITDA |
| 1.13B | 2.17B | 2.20B | 1.91B | 341.00M | Net Income Common Stockholders |
| 647.00M | 1.20B | 1.24B | 995.00M | -385.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 361.00M | 1.61B | 1.10B | 959.00M | 717.00M | Total Assets |
| 14.07B | 11.24B | 10.75B | 10.02B | 9.48B | Total Debt |
| 5.62B | 3.27B | 3.20B | 3.12B | 3.23B | Net Debt |
| 5.25B | 1.66B | 2.10B | 2.16B | 2.51B | Total Liabilities |
| 8.96B | 6.03B | 6.13B | 5.68B | 5.54B | Stockholders Equity |
| 5.08B | 5.17B | 4.58B | 4.30B | 3.90B |
| Cash Flow | Free Cash Flow | |||
| 1.25B | 1.19B | 1.31B | 1.09B | 828.00M | Operating Cash Flow |
| 1.89B | 1.72B | 1.76B | 1.50B | 1.14B | Investing Cash Flow |
| -3.39B | -356.00M | -623.00M | -377.00M | -205.00M | Financing Cash Flow |
| 334.00M | -877.00M | -974.00M | -881.00M | -358.00M |
Owens Corning Technical Analysis
Negative
135.14
Price Trends
141.23
Negative
155.57
Negative
166.22
Negative
Market Momentum
-0.96
Positive
41.97
Neutral
24.15
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OC, the sentiment is Negative. The current price of 135.14 is below the 20-day moving average (MA) of 141.50, below the 50-day MA of 141.23, and below the 200-day MA of 166.22, indicating a bearish trend. The MACD of -0.96 indicates Positive momentum. The RSI at 41.97 is Neutral, neither overbought nor oversold. The STOCH value of 24.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for OC.
Owens Corning Risk Analysis
Owens Corning disclosed 33 risk factors in its most recent earnings report. Owens Corning reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
We may incur rationalization costs and there can be no assurance that our efforts to reduce costs will be successful. Q4, 2024
Owens Corning Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $17.45B | 11.02 | 33.11% | 0.99% | -0.14% | 135.52% | |
71 Outperform | $12.01B | 50.68 | 11.93% | 1.91% | 16.16% | -77.11% | |
69 Neutral | $9.19B | 20.56 | 31.26% | 0.58% | 1.04% | -10.78% | |
67 Neutral | $12.14B | 14.10 | 19.62% | ― | -5.49% | -33.51% | |
64 Neutral | $4.39B | 11.81 | 5.17% | 249.38% | 3.98% | -12.17% | |
63 Neutral | $13.90B | 18.01 | -118.61% | 1.87% | -2.67% | -10.72% |
* Industrials Sector Average
Performance Comparison
OC
Owens Corning
135.14
-38.83
-22.32%
BLDR
Builders Firstsource
109.84
-56.52
-33.97%
CSL
Carlisle Companies
389.47
-29.55
-7.05%
MAS
Masco
62.68
-5.27
-7.76%
WMS
Advanced Drainage Systems
111.00
-63.14
-36.26%
Owens Corning Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: -5.25%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Positive
The earnings call presented a positive outlook with strong revenue growth and consistent EBITDA margins, along with strategic investments and recognition for sustainability. However, there were concerns about the impact of tariffs, challenges in the Residential Insulation segment, and slower new residential construction due to macroeconomic factors. The highlights outweigh the lowlights, indicating a positive overall sentiment.Q1-2025 Updates
Positive Updates
Strong Revenue Growth
Owens Corning delivered revenue of $2.5 billion in Q1 2025, an increase of 25% year-over-year compared to the prior year's revenue of $2 billion.
Consistent EBITDA Margins
The company achieved an adjusted EBITDA of $565 million with a margin of 22%, marking the 19th consecutive quarter of delivering adjusted EBITDA margins above 20%.
Safety Achievements
Owens Corning reported a recordable incident rate of 0.54, which is 80% lower than the manufacturing industry average.
Strategic Investments and Divestitures
The company continues to invest in its Roofing and Insulation businesses and is on track with strategic divestitures, including the sale of glass reinforcements in China and Korea.
Recognition for Sustainability
Owens Corning was recognized by Barron's as one of the 100 most sustainable companies in the U.S., ranking fourth on the annual list.
Negative Updates
Challenges in Residential Insulation
North America Residential Insulation volume was down due to market uncertainty tied to the broader U.S. macro environment.
Tariff Impact Concerns
Tariffs could have a net impact of around $10 million in Q2, primarily affecting the Doors business, with potential future exposure of 1% to 2% of cost of goods sold.
Weaker Demand in New Residential Construction
New residential construction, which accounts for about a quarter of the company's revenue, started the year slower due to elevated interest rates.
Free Cash Flow Outflow
Free cash flow for the quarter was a net outflow of $252 million, driven by the timing of working capital from seasonality and capital additions.
Company Guidance
During Owens Corning's First Quarter 2025 Earnings Call, the company provided guidance on several key metrics and strategic actions. Owens Corning reported a revenue of $2.5 billion for the first quarter, marking a 25% year-over-year increase from $2 billion, with an adjusted EBITDA of $565 million and an adjusted EBITDA margin of 22%. The call highlighted their ongoing focus on safety, with a recordable incident rate of 0.54, which is 80% lower than the industry average. The company emphasized the durability of their earnings and strategic investments in their Roofing and Insulation businesses, projecting future growth and network flexibility. Despite a mixed market environment, particularly in North America and Europe, Owens Corning expects high single-digit revenue growth in the second quarter compared to the prior year's $2.5 billion, with adjusted EBITDA margins projected in the low to mid-20% range. The company also discussed ongoing tariff impacts, with a $50 million gross exposure in the second quarter, mitigated to around $10 million net, primarily affecting the Doors business. They remain committed to maintaining strong free cash flow and returning about 50% to investors over time while executing their growth strategies.Owens Corning Corporate Events
M&A TransactionsBusiness Operations and Strategy
Owens Corning Announces Strategic Shift with Reorganization
Neutral
May 5, 2025
On February 13, 2025, Owens Corning announced a strategic shift by selling its glass reinforcements business and reorganizing its segments into Roofing, Insulation, and Doors, effective January 1, 2025. This reorganization aims to align with the new operating structure, and the company will report financial results under this new segmentation starting with the first quarter of 2025. The recast financial information for 2024 is provided to enhance investor understanding, though it does not affect previously reported financial metrics.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.