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

Profitability

This table compares Quanex Building Products Corporation and Installed Building Products’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Quanex Building Products Corporation -0.09% 7.70% 3.64%
Installed Building Products 4.11% 25.27% 7.46%

Valuation and Earnings

This table compares Quanex Building Products Corporation and Installed Building Products’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Quanex Building Products Corporation $901.48 million 0.72 $98.42 million ($0.03) -631.46
Installed Building Products $997.23 million 1.83 $121.83 million $1.30 44.12

Installed Building Products has higher revenue and earnings than Quanex Building Products Corporation. Quanex Building Products Corporation 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 recent recommendations and price targets for Quanex Building Products Corporation and Installed Building Products, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Quanex Building Products Corporation 0 0 3 0 3.00
Installed Building Products 0 0 3 0 3.00

Quanex Building Products Corporation presently has a consensus target price of $23.75, indicating a potential upside of 25.33%. Installed Building Products has a consensus target price of $63.67, indicating a potential upside of 11.01%. Given Quanex Building Products Corporation’s higher possible upside, equities research analysts plainly believe Quanex Building Products Corporation is more favorable than Installed Building Products.

Insider & Institutional Ownership

99.5% of Quanex Building Products Corporation shares are owned by institutional investors. Comparatively, 63.6% of Installed Building Products shares are owned by institutional investors. 5.3% of Quanex Building Products Corporation shares are owned by insiders. Comparatively, 32.9% of Installed Building Products shares are owned by 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.

Dividends

Quanex Building Products Corporation pays an annual dividend of $0.16 per share and has a dividend yield of 0.8%. Installed Building Products does not pay a dividend. Quanex Building Products Corporation pays out -533.2% of its earnings in the form of a dividend.

Volatility and Risk

Quanex Building Products Corporation has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500. Comparatively, Installed Building Products has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500.

Summary

Installed Building Products beats Quanex Building Products Corporation on 9 of the 13 factors compared between the two stocks.

Quanex Building Products Corporation Company Profile

Quanex Building Products Corporation manufactures components for original equipment manufacturers (OEM) in the building products industry. The Company’s components can be categorized as window and door (fenestration) components, and kitchen and bath cabinet components. The Company operates through three segments: North American Engineered Components (NA Engineered Components), which consists of four operating segments primarily focused on the fenestration market in North America manufacturing vinyl profiles, insulating glass (IG) spacers, screens and other fenestration components; European Engineered Components (EU Engineered Components), which consists of the United Kingdom-based vinyl extrusion business, manufacturing vinyl profiles and conservatories, and the European insulating glass business manufacturing IG spacers, and North American Cabinet Components (NA Cabinet Components), which consists of the North American cabinet door and components business.

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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