Argan (NYSE:AGX) vs. Owens Corning (NYSE:OC) Financial Analysis

Argan (NYSE:AGX) and Owens Corning (NYSE:OC) are both large-cap construction companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, profitability, earnings and analyst recommendations.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Argan	15.48%	36.89%	14.64%
Owens Corning	-5.43%	19.86%	6.32%

Dividends

Argan pays an annual dividend of $2.00 per share and has a dividend yield of 0.3%. Owens Corning pays an annual dividend of $3.16 per share and has a dividend yield of 2.5%. Argan pays out 17.6% of its earnings in the form of a dividend. Owens Corning pays out -47.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Argan has increased its dividend for 2 consecutive years and Owens Corning has increased its dividend for 10 consecutive years. Owens Corning is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

79.4% of Argan shares are held by institutional investors. Comparatively, 88.4% of Owens Corning shares are held by institutional investors. 6.7% of Argan shares are held by insiders. Comparatively, 0.9% of Owens Corning shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings for Argan and Owens Corning, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Argan	0	4	4	0	2.50
Owens Corning	1	6	7	1	2.53

Argan currently has a consensus target price of $470.40, indicating a potential downside of 36.30%. Owens Corning has a consensus target price of $144.82, indicating a potential upside of 13.04%. Given Owens Corning’s stronger consensus rating and higher probable upside, analysts plainly believe Owens Corning is more favorable than Argan.

Volatility & Risk

Argan has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500. Comparatively, Owens Corning has a beta of 1.34, suggesting that its share price is 34% more volatile than the S&P 500.

Valuation and Earnings

This table compares Argan and Owens Corning”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Argan	$1.04 billion	9.94	$137.77 million	$11.38	64.89
Owens Corning	$10.10 billion	1.02	-$522.00 million	($6.61)	-19.38

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

Summary

Owens Corning beats Argan on 10 of the 18 factors compared between the two stocks.

About Argan

Argan, Inc., through its subsidiaries, provides engineering, procurement, construction, commissioning, maintenance, project development, and technical consulting services to the power generation market. The company operates through Power Services, Industrial Services, and Telecom Services segments. The Power Services segment offers engineering, procurement, and construction, as well as designing, building, and commissioning of large-scale energy projects to the owners of alternative energy facilities, such as biomass plants, wind farms, and solar fields; and design, construction, project management, start-up, and operation services for projects with approximately 18 gigawatts of power-generating capacity. This segment serves independent power project owners, public utilities, power plant equipment suppliers, and other commercial firms. The Industrial Services segment provides industrial construction and field services and vessel fabrication services for fertilizer, engineering and construction, forest products, and various other industrial companies in southeast region of the United States. The Telecom Services segment offers trenchless directional boring and excavation for underground communication and power networks, as well as aerial cabling services; and installs buried cable, high and low voltage electric lines, and private area outdoor lighting systems. It also provides structured cabling, terminations, and connectivity that offers the physical transport for high-speed data, voice, video, and security networks. This segment serves electricity cooperative, state and local government agencies, counties and municipalities, and technology-oriented government contracting firms, as well as federal government facilities in the mid-Atlantic region of the United States. Argan, Inc. was incorporated in 1961 and is headquartered in Rockville, Maryland.

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.