Street Calls of the Week
On Wednesday, RBC Capital Markets adjusted its price target on Owens Corning (NYSE:OC), a company known for its insulation, roofing, and fiberglass composites. The new target is set at $213.00, up from the previous figure of $211.00. The firm continues to hold an Outperform rating on the stock.
The revision follows Owens Corning (NYSE:GLW)'s strong second-quarter margin performance and a third-quarter legacy guide that supports current expectations, despite weaker results from its DOOR segment. According to the analyst, the company's price and cost momentum in its Roofing and Insulation segments is ongoing, and the negative impact from the Composites division appears to be waning.
The firm's forecast for Owens Corning's fiscal year 2024 earnings per share (EPS) has increased by 5% to $15.65, with an adjustment to EBITDA (earnings before interest, taxes, depreciation, and amortization) by 2% to $2.67 billion. This optimistic outlook is based on the assumption that the drag from the Composites business is diminishing and the Door segment's expectations have now been more accurately set.
For the third quarter, RBC Capital anticipates an EPS of $4.14, a slight increase from the prior estimate of $4.07. The firm suggests there is still potential for earnings to surpass expectations, particularly driven by the Roofing and Insulation segments' margins.
The analyst's statement emphasizes the positive developments in Owens Corning's business, which have led to the increased price target. The company's solid performance and favorable conditions in key segments have contributed to the firm's optimistic stance on the stock's potential.
InvestingPro Insights
Recent data from InvestingPro indicates that Owens Corning (NYSE:OC) is demonstrating strong financial health and market performance. With a market capitalization of $13.65 billion, the company operates with a moderate level of debt and has a trailing twelve-month P/E ratio of 12.11, which suggests the stock may be undervalued relative to its earnings. InvestingPro Tips highlight that Owens Corning has shown a commitment to shareholder value through aggressive share buybacks and has consistently raised its dividend for 5 consecutive years, with a notable dividend growth of 15.38% in the last twelve months as of Q2 2024.
Moreover, the company's ability to cover its interest payments with its cash flows is reassuring for investors. Analysts have also revised their earnings upwards for the upcoming period, reflecting confidence in Owens Corning's profitability for the year. Despite a recent downturn in the stock price with a one-week total return of -15.46%, the long-term view remains positive, with a strong return over the last five years. For those interested in further insights, there are additional InvestingPro Tips available at https://www.investing.com/pro/OC.
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