Critical Comparison: Fortune Brands Home & Security (FBHS) versus Installed Building Products (NYSE:IBP)

Fortune Brands Home & Security (NYSE: FBHS) and Installed Building Products (NYSE:IBP) are both industrial products companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, profitabiliy, institutional ownership, analyst recommendations, valuation and risk.

Valuation & Earnings

This table compares Fortune Brands Home & Security and Installed Building Products’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fortune Brands Home & Security $5.13 billion 1.89 $822.40 million $2.84 22.14
Installed Building Products $997.23 million 1.85 $121.83 million $1.30 44.58

Fortune Brands Home & Security has higher revenue and earnings than Installed Building Products. Fortune Brands Home & Security 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.

Risk & Volatility

Fortune Brands Home & Security has a beta of 1.39, suggesting that its share price is 39% more volatile than the S&P 500. Comparatively, Installed Building Products has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Fortune Brands Home & Security and Installed Building Products, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fortune Brands Home & Security 0 7 10 0 2.59
Installed Building Products 0 0 4 0 3.00

Fortune Brands Home & Security presently has a consensus target price of $67.21, indicating a potential upside of 6.88%. Installed Building Products has a consensus target price of $56.50, indicating a potential downside of 2.50%. Given Fortune Brands Home & Security’s higher possible upside, analysts clearly believe Fortune Brands Home & Security is more favorable than Installed Building Products.

Profitability

This table compares Fortune Brands Home & Security and Installed Building Products’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fortune Brands Home & Security 8.61% 18.93% 8.88%
Installed Building Products 4.11% 25.27% 7.46%

Insider & Institutional Ownership

85.9% of Fortune Brands Home & Security shares are owned by institutional investors. Comparatively, 63.7% of Installed Building Products shares are owned by institutional investors. 1.6% of Fortune Brands Home & Security shares are owned by insiders. Comparatively, 32.9% of Installed Building Products shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Fortune Brands Home & Security pays an annual dividend of $0.72 per share and has a dividend yield of 1.1%. Installed Building Products does not pay a dividend. Fortune Brands Home & Security pays out 25.4% of its earnings in the form of a dividend. Installed Building Products has raised its dividend for 3 consecutive years.

Summary

Fortune Brands Home & Security beats Installed Building Products on 11 of the 17 factors compared between the two stocks.

Fortune Brands Home & Security Company Profile

Fortune Brands Home & Security, Inc. is a holding company. The Company operates through four segments. The Cabinets segment includes custom, semi-custom and stock cabinetry for the kitchen, bath and other parts of the home under brand names, including Aristokraft, Mid-Continent, Diamond, Kitchen Classics, Kitchen Craft, Schrock, Omega, Homecrest, Thomasville, StarMark and Ultracraft. The Plumbing segment manufactures or assembles and sells faucets, bath furnishings, accessories and kitchen sinks and waste disposals under the Moen, Riobel, ROHL, Perrin & Rowe, and Waste King brands. The Doors segment includes residential fiberglass and steel entry door systems under the Therma-Tru brand name and urethane millwork product lines under the Fypon brand name. The Security segment includes locks, safety and security devices and electronic security products under the Master Lock brand name and fire resistant safes, security containers and commercial cabinets under the SentrySafe brand name.

Installed Building Products Company Profile

Installed Building Products, Inc. is a holding company. The Company is a residential insulation installer in the United States. As of December 31, 2016, the Company’s national platform included over 100 locations accessing customers in 48 continental states and the District of Columbia. The Company also installs complementary building products, including garage doors, rain gutters, shower doors, closet shelving and mirrors, which provides cross-selling opportunities to supplement the insulation installation business. The Company manages various aspects of the installation process for the customers, from the direct purchase and receipt of materials from national manufacturers, to supply of materials to job sites and quality installation. The Company’s customers include production and custom homebuilders, multi-family and commercial contractors, and homeowners.

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