Head to Head Comparison: Advanced Drainage Systems (NYSE:WMS) versus Owens Corning (NYSE:OC)

Advanced Drainage Systems (NYSE:WMS) and Owens Corning (NYSE:OC) are both construction companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, risk, profitability and dividends.

Earnings and Valuation

This table compares Advanced Drainage Systems and Owens Corning”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Advanced Drainage Systems	$2.90 billion	3.83	$450.17 million	$6.01	23.75
Owens Corning	$10.10 billion	0.98	-$522.00 million	($6.40)	-19.20

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

Analyst Recommendations

This is a summary of current recommendations and price targets for Advanced Drainage Systems and Owens Corning, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Advanced Drainage Systems	0	1	7	0	2.88
Owens Corning	1	5	9	1	2.63

Advanced Drainage Systems presently has a consensus target price of $190.29, suggesting a potential upside of 33.33%. Owens Corning has a consensus target price of $145.09, suggesting a potential upside of 18.08%. Given Advanced Drainage Systems’ stronger consensus rating and higher possible upside, analysts clearly believe Advanced Drainage Systems is more favorable than Owens Corning.

Risk & Volatility

Advanced Drainage Systems has a beta of 1.33, meaning that its stock price is 33% more volatile than the S&P 500. Comparatively, Owens Corning has a beta of 1.35, meaning that its stock price is 35% more volatile than the S&P 500.

Insider and Institutional Ownership

89.8% of Advanced Drainage Systems shares are held by institutional investors. Comparatively, 88.4% of Owens Corning shares are held by institutional investors. 1.6% of Advanced Drainage Systems shares are held by insiders. Comparatively, 0.9% of Owens Corning shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Advanced Drainage Systems	15.75%	27.72%	12.31%
Owens Corning	-5.17%	21.93%	7.33%

Dividends

Advanced Drainage Systems pays an annual dividend of $0.72 per share and has a dividend yield of 0.5%. Owens Corning pays an annual dividend of $3.16 per share and has a dividend yield of 2.6%. Advanced Drainage Systems pays out 12.0% of its earnings in the form of a dividend. Owens Corning pays out -49.4% 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. Advanced Drainage Systems has raised its dividend for 1 consecutive years and Owens Corning has raised 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.

Summary

Advanced Drainage Systems beats Owens Corning on 11 of the 18 factors compared between the two stocks.

About Advanced Drainage Systems

Advanced Drainage Systems, Inc. designs, manufactures, and markets thermoplastic corrugated pipes and related water management products in North America and internationally. The company operates through Pipe, International, Infiltrator, and Allied Products & Other segments. It offers single, double, and triple wall corrugated polypropylene and polyethylene pipes; plastic leachfield chambers and systems; EZflow synthetic aggregate bundles; wastewater purification through mechanical aeration wastewater for residential and commercial systems; septic tanks and accessories; combined treatment and dispersal systems, including advanced enviro-septic and advanced treatment leachfield systems; and allied products, including storm retention/detention and septic chambers, polyvinyl chloride drainage structures, fittings, and water quality filters and separators. The company also purchases and distributes construction fabrics and other geosynthetic products for soil stabilization, reinforcement, filtration, separation, erosion control, and sub-surface drainage, as well as drainage grates and other products. In addition, it provides PVC hubs, rubber sleeves, and stainless-steel bands. The company offers its products for non-residential, residential, agriculture, and infrastructure applications through a network of distribution centers. Advanced Drainage Systems, Inc. incorporated in 1966 and is headquartered in Hilliard, Ohio.

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.