Prior to today's trading, shares of the construction materials company had lost 2.24% over the past month. This has was narrower than the Construction sector's loss of 4.68% and lagged the S&P 500's gain of 3.22% in that time. For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $15.48 per share and a revenue of $11.23 billion, representing changes of +7.35% and +16.03%, respectively, from the prior year. Our research demonstrates that these adjustments in estimates directly ...

Core Insights - The article emphasizes the importance of utilizing Zacks Premium and its various tools, such as the Zacks Style Scores and Zacks Rank, to enhance stock market investment strategies and achieve better returns. Group 1: Zacks Style Scores - Zacks Style Scores provide a unique rating system for stocks based on value, growth, and momentum characteristics, helping investors identify securities with high potential for market outperformance [2][15]. - The Value Style Score focuses on identifying attractive and discounted stocks using ratios like P/E, PEG, and Price/Sales [3]. - The Momentum Style Score assists investors in capitalizing on upward or downward trends in stock prices, utilizing factors like one-week price change and monthly earnings estimate changes [4]. Group 2: Zacks Rank and Performance - The Zacks Rank is a proprietary stock-rating model that leverages earnings estimate revisions to guide investors in building successful portfolios [5]. - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [17]. - A stock's earnings estimate revisions are crucial in determining its potential for investment, as they work in conjunction with the Zacks Rank [18]. Group 3: Company Spotlight - Owens Corning (OC) - Owens Corning (OC) is highlighted as a stock to watch, currently holding a 1 (Strong Buy) rating on the Zacks Rank and a VGM Score of B [12][20]. - Analysts have revised OC's earnings estimate higher for fiscal 2024, with the Zacks Consensus Estimate increasing by $1.79 to $15.48 per share, and the company has an average earnings surprise of 17.4% [8]. - OC is recognized as a leader in building materials and composite solutions, with a strong focus on glass fiber technology for various high-performance markets [19].

Company Analysis - Owens Corning is outperforming its end markets, leading to analysts raising their price targets for the stock, with Barclays increasing it to $190 from $160 and RBC Capital raising it to $201 [4][6] - The company's roofing segment saw a 7% increase in sales in the first quarter, contrasting with a 2% decline in the insulation segment and an 11% decline in its composites business [15] - Owens Corning's acquisition of Masonite adds complementary building products to its portfolio, enhancing its market position [10] Industry Insights - The overall housing market remains sluggish, particularly in the repair and remodeling sector, but there are strengths in the single-family new residential construction market due to affordability issues and low inventory of existing homes [9][11] - Analysts are increasingly optimistic about the roofing, insulation, and composites sectors, particularly for Owens Corning, while sentiment is declining for Stanley Black & Decker [12][16] - The housing market conditions are affecting Owens Corning and Stanley Black & Decker in opposite ways, with Owens Corning benefiting from repair and remodeling activities, while Stanley Black & Decker faces challenges [16][20] Challenges and Strategies - Stanley Black & Decker is under pressure due to weak demand, leading to a disappointing inventory-to-sales ratio, despite efforts to reduce inventory [3][8] - The company has outlined a need to invest between $300 million to $500 million to regain market share, indicating deeper issues beyond just weak demand [8][18] - Stanley Black & Decker's restructuring plan aims to cut costs by $2 billion by 2025, which includes reducing product ranges and consolidating facilities [13]

Earnings and Revenue Projections - Analysts expect earnings of $15 48 per share and revenue of $11 23 billion for the full year, representing year-over-year increases of +7 35% and +16 03% respectively [1] - For the upcoming quarter, earnings per share (EPS) are projected at $4 31, a 2 13% increase from the same quarter last year, with quarterly revenue expected to be $2 87 billion, up 12 13% year-over-year [6] Valuation Metrics - The company currently has a Forward P/E ratio of 11 6, which is a discount compared to the industry average Forward P/E of 19 13 [4] - The PEG ratio stands at 5 34, significantly higher than the industry average PEG ratio of 1 74 [8] Stock Performance - The stock ended the recent trading session at $176 56, showing a -1 65% change from the previous day's close [10] - Over the past month, the stock gained 2 8%, outperforming the Construction sector's loss of 0 27% but lagging behind the S&P 500's gain of 4 59% [10] Industry and Sector Context - The Building Products - Miscellaneous industry, part of the Construction sector, holds a Zacks Industry Rank of 35, placing it in the top 14% of all 250+ industries [5] - The Zacks Industry Rank indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [5] Analyst Sentiment and Revisions - Recent upward revisions in analyst estimates reflect a favorable outlook on the company's business health and profitability [2] - The Zacks Consensus EPS estimate has risen by 0 72% over the past month, and the company currently holds a Zacks Rank of 1 (Strong Buy) [3] Market Correlation - Research shows that changes in analyst estimates are directly correlated with near-term stock prices, forming the basis of the Zacks Rank system [7]

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Investors interested in Construction stocks should always be looking to find the best-performing companies in the group. Owens Corning (OC) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? Let's take a closer look at the stock's year-to-date performance to find out. Owens Corning is one of 94 individual stocks in the Construction sector. Collectively, these companies sit at #1 in the Zacks Sector Rank. The Zacks Sector ...

Company Performance - Owens Corning's shares have increased by 7.6% over the past month and reached a new 52-week high of $181.6, with a year-to-date gain of 22.3% compared to 10% for the Zacks Construction sector and 11.1% for the Zacks Building Products - Miscellaneous industry [1] - The company has consistently exceeded earnings expectations, reporting EPS of $3.59 against a consensus estimate of $3.04 in its last earnings report [2] - For the current fiscal year, Owens Corning is projected to achieve earnings of $15.48 per share on revenues of $11.23 billion, reflecting a 7.35% increase in EPS and a 16.03% increase in revenues [3] Valuation Metrics - The stock trades at 11.7X current fiscal year EPS estimates, below the peer industry average of 19.1X, and at 8.4X trailing cash flow compared to the peer group's average of 12.9X [7] - The company has a PEG ratio of 5.4, indicating it is not among the top value stocks [7] Zacks Rank and Style Scores - Owens Corning holds a Zacks Rank of 1 (Strong Buy) due to rising earnings estimates, aligning with the recommendation for investors to select stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [8] - The company has a Value Score of B, a Growth Score of C, and a Momentum Score of D, resulting in a combined VGM Score of B [6] Industry Comparison - The Building Products - Miscellaneous industry is performing well, ranking in the top 18% of all industries, providing favorable conditions for both Owens Corning and its peer Frontdoor Inc. [11] - Frontdoor Inc. also has a Zacks Rank of 1 (Strong Buy) and has shown strong earnings performance, beating consensus estimates by 115% [10]

Company Overview - Owens Corning manufactures products for residential and commercial buildings, including roofing, insulation, and fiberglass composites, with annual sales nearing $10 billion [3] - The company operates in three segments: Roofing, Insulation, and Composites, catering to various markets including building products and renewable energy [4] Financial Performance - The company experienced double-digit growth across all segments in 2021 and 2022, but faced a decline in demand for Insulation and Composites in 2023, offset by a 10% sales growth in the Roofing segment [5] - Owens Corning has a history of increasing its annual dividend from 64 cents in 2014, with significant increases of 35%, 49%, and 15% from 2021 to 2023 [6][10] Dividend Growth - The company has a decade-long record of dividend growth, making it less likely to cut or eliminate dividends in the future [7] - Current dividend yield stands at 1.32%, reflecting the trade-off between current yield and rapid dividend growth [6] Stock Performance - The stock recently broke out to new highs on May 24th, indicating institutional accumulation, with a more than 65% increase since late October [2][8] - The market is currently in an uptrend, and the breakout was supported by above-average volume, suggesting potential for continued upward movement [9][10]

Core Viewpoint - Owens Corning has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, suggesting that rising earnings estimates can lead to higher stock prices [4][6]. - For Owens Corning, the expected earnings per share for the fiscal year ending December 2024 is $15.48, reflecting a year-over-year increase of 7.4% [8]. Analyst Sentiment and Market Position - Analysts have raised their earnings estimates for Owens Corning, with the Zacks Consensus Estimate increasing by 9.5% over the past three months [8]. - The upgrade to Zacks Rank 1 places Owens Corning in the top 5% of Zacks-covered stocks, indicating strong potential for near-term stock price appreciation [11]. Zacks Rating System - The Zacks Rank system classifies stocks based on earnings estimate revisions, with a proven track record of Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [7][9]. - The system maintains a balanced distribution of ratings, ensuring that only the top 20% of stocks are considered for strong buy recommendations, highlighting their superior earnings estimate revision characteristics [9].

Core Viewpoint - Owens Corning reported strong first-quarter 2024 earnings, with adjusted earnings per share (EPS) and net sales exceeding expectations, despite a decline in sales volumes in certain segments [2][3]. Financial Performance - Adjusted EPS was $3.59, surpassing the consensus estimate of $3.04 by 18.1% and increasing 28% from $2.80 a year ago [3]. - Net sales reached $2.3 billion, beating the consensus mark of $2.26 billion by 1.8%, but fell 1% year over year from $2.33 billion [3]. Segment Performance - **Composites Segment**: Net sales decreased 11% year over year to $523 million due to lower volumes and price declines, but EBIT margin improved to 9% from 8% [4]. - **Insulation Segment**: Net sales were $904 million, down 2% year over year, with stable demand in North America but challenges in Europe; EBIT margin rose 100 basis points to 18% [5]. - **Roofing Segment**: Net sales increased 7% year over year to $957 million, driven by strong demand for premium products; EBIT margin expanded to 30% [6]. Operating Highlights - Adjusted EBIT and adjusted EBITDA improved 21% and 16% year over year, with both margins expanding by 400 basis points [7]. Balance Sheet - As of March 31, 2024, cash and cash equivalents were $1.25 billion, down from $1.62 billion at the end of 2023; long-term debt totaled $2.65 billion [8]. Cash Flow and Shareholder Returns - In Q1 2024, net cash provided by operating activities was $24 million, compared to a net cash outflow of $164 million in the previous year; free cash flow was negative $128 million [9]. - The company returned $182 million to shareholders through dividends and share repurchases, including a cash dividend of $52 million and $130 million in share repurchases [10]. Market Outlook - The company anticipates favorable conditions in North American building and construction markets, with expectations for net sales to align with Q2 2023 levels and EBIT margins around 20% [11][12]. - For 2024, general corporate expenses are projected between $240 million and $250 million, with interest expenses estimated at $70 million to $80 million [13]. Estimate Trends - Recent estimates have shown an upward trend, with a consensus estimate shift of 14.63% [14]. Investment Scores - Owens Corning has an average Growth Score of C and a value grade of B, placing it in the top 40% for the value investment strategy, resulting in an aggregate VGM Score of B [15]. Future Expectations - The upward trend in estimates suggests a promising outlook, with the company holding a Zacks Rank 1 (Strong Buy) and expectations for above-average returns in the coming months [16].