US stock futures muted with Jackson Hole, retail earnings on tap
On Monday, RBC Capital Markets adjusted its financial outlook for Owens Corning (NYSE:OC), a company known for its insulation, roofing, and fiberglass composites, with a current market capitalization of $12 billion. Analyst Mike Dahl of RBC Capital set a new price target for Owens Corning shares to $199.00, down from the previous target of $212.00, while maintaining an Outperform rating for the stock. According to InvestingPro data, the stock has experienced a significant 25% decline over the past six months, though current analysis suggests the stock is fairly valued.
Dahl’s commentary highlighted a mix of positive and negative industry trends affecting the company’s projections. He noted that residential roofing remains resilient year-to-date and anticipates successful implementation of the April price increase. The company’s financial health remains strong, with InvestingPro data showing a solid EV/EBITDA ratio of 6.7x and healthy EBITDA of $2.56 billion. However, adjustments were made to Owens Corning’s estimates to account for various factors, including increased corporate costs and the elimination of an earlier price increase for Insulation due to non-realization.
The revised estimates also reflect lower new residential volumes across segments and decreased asphalt costs in the Roofing division. Dahl stated that these changes have led to a 6% reduction in the forecasted earnings per share (EPS) for fiscal year 2025 to $14.63, and a 4% decline in adjusted EBITDA to $2.55 billion.
Despite these adjustments, Dahl remains optimistic about Owens Corning’s earnings potential. He cited the company’s limited exposure to tariffs and an improving Roofing margin backdrop as factors that should support its earnings relative to peers in the current year. InvestingPro analysis reveals several positive indicators, including consistent dividend payments for 12 consecutive years and a current dividend yield of 1.99%. The price target was lowered to $199 in light of the revised estimates, but the Outperform rating indicates a continued positive outlook on the stock by RBC Capital. InvestingPro subscribers have access to 8 additional key insights about Owens Corning, including detailed financial health metrics and growth projections.
In other recent news, Owens Corning reported strong fourth-quarter results for 2024, surpassing expectations in revenue, EBITDA, and earnings per share (EPS), driven by continued demand for shingles. However, the company faced challenges in the repair and remodel and new construction sectors, affecting its doors and insulation segments. Meanwhile, Owens Corning has ended its trade receivables securitization program, a move that marks a shift in its financial management practices. The reasons for this termination have not been disclosed, but the company filed the decision with the SEC.
Analysts have made various adjustments to their outlooks for Owens Corning. Evercore ISI raised its price target to $185, maintaining an In Line rating, due to revised sales estimates in the Roofing segment and increased corporate expenses. Benchmark analysts kept a Hold rating on the stock, adjusting EPS estimates downward by $2.00 due to market challenges. RBC Capital Markets reduced its price target to $212 while maintaining an Outperform rating, citing lower EPS forecasts for fiscal year 2025 due to the transition of the Glass Reinforcements business to discontinued operations.
In corporate developments, Owens Corning promoted Gina Beredo to Executive Vice President, Chief Administrative Officer, and General Counsel. Her new role includes managing the company’s human resources, in addition to her existing responsibilities. This executive change is part of the company’s focus on internal talent elevation and strategic alignment. These recent developments reflect Owens Corning’s ongoing efforts to navigate market conditions and align its leadership with strategic goals.
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