Critical Comparison: Owens Corning (NYSE:OC) vs. Frontdoor (NASDAQ:FTDR)

Owens Corning (NYSE:OC) and Frontdoor (NASDAQ:FTDR) are both mid-cap construction companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, profitability, risk and institutional ownership.

Volatility & Risk

Owens Corning has a beta of 1.35, suggesting that its share price is 35% more volatile than the S&P 500. Comparatively, Frontdoor has a beta of 1.31, suggesting that its share price is 31% more volatile than the S&P 500.

Insider and Institutional Ownership

88.4% of Owens Corning shares are held by institutional investors. 0.8% of Owens Corning shares are held by insiders. Comparatively, 1.5% of Frontdoor shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds 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 Owens Corning and Frontdoor, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Owens Corning	2	4	10	1	2.59
Frontdoor	0	4	2	0	2.33

Owens Corning currently has a consensus target price of $151.58, indicating a potential upside of 51.63%. Frontdoor has a consensus target price of $65.75, indicating a potential upside of 15.07%. Given Owens Corning’s stronger consensus rating and higher probable upside, equities analysts plainly believe Owens Corning is more favorable than Frontdoor.

Valuation and Earnings

This table compares Owens Corning and Frontdoor”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Owens Corning	$10.10 billion	0.80	-$522.00 million	($6.40)	-15.62
Frontdoor	$2.09 billion	1.93	$255.00 million	$3.41	16.76

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

Profitability

This table compares Owens Corning and Frontdoor’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Owens Corning	-5.17%	21.93%	7.33%
Frontdoor	12.18%	120.79%	14.09%

Summary

Frontdoor beats Owens Corning on 8 of the 15 factors compared between the two stocks.

About Owens Corning

Owens Corning manufactures and sells building and construction materials in the United States, Europe, the Asia Pacific, and internationally. It operates in three segments: Roofing, Insulation, and Composites. The Roofing segment manufactures and sells laminate and strip asphalt roofing shingles, oxidized asphalt materials, and roofing components used in residential and commercial construction, and specialty applications. This segment sells its products through distributors, home centers, and lumberyards, as well as to roofing contractors for built-up roofing asphalt systems; and manufacturers in automotive, chemical, rubber, and construction industries. The Insulation segment manufactures and sells thermal and acoustical batts, loosefill insulation, spray foam insulation, foam sheathing and accessories under the Owens Corning PINK, and FIBERGLAS brands; and glass fiber pipe insulation, energy efficient flexible duct media, bonded and granulated mineral wool insulation, cellular glass insulation, and foam insulation under the FOAMULAR, FOAMGLAS, and Paroc brand names used in construction applications. This segment sells its products primarily to the insulation installers, home centers, lumberyards, retailers, and distributors. The Composites segment manufactures, fabricates, and sells glass reinforcements in the form of fiber; and glass fiber products in the form of fabrics, non-wovens, and composite lumber. Its products are used in building structures, roofing shingles, tubs and showers, pools, decking, flooring, pipes and tanks, poles, electrical equipment, and wind-energy turbine blades. This segment sells its products directly to parts molders, fabricators, and shingle manufacturers. The company was incorporated in 1938 and is headquartered in Toledo, Ohio.

About Frontdoor

Frontdoor, Inc. provides home warranties in the United States in the United States. Its customizable home warranties help customers protect and maintain their homes from costly and unplanned breakdowns of essential home systems and appliances. The company’s home warranty customers subscribe to an annual service plan agreement that covers the repair or replacement of principal components of approximately 20 home systems and appliances, including electrical, plumbing, water heaters, refrigerators, dishwashers, and ranges/ovens/cooktops, as well as electronics, pools, and spas and pumps; and heating, ventilation, and air conditioning systems. It also offers on-demand home services and a one-stop app experience for home repair and maintenance; and Streem technology, an app that empowers homeowners by connecting them in real time through video chat with qualified experts to diagnose and solve their problems. The company serves homeowners under the Frontdoor, American Home Shield, HSA, OneGuard, Landmark Home Warranty, Frontdoor logo, and Streem brands. The company was founded in 1971 and is headquartered in Memphis, Tennessee.