Head-To-Head Review: Armstrong World Industries (AWI) & USG Corporation (USG)

Armstrong World Industries (NYSE: AWI) and USG Corporation (NYSE:USG) are both mid-cap construction companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, earnings, institutional ownership, risk, analyst recommendations and valuation.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Armstrong World Industries and USG Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Armstrong World Industries 1 3 4 0 2.38
USG Corporation 2 11 5 0 2.17

Armstrong World Industries presently has a consensus price target of $44.83, suggesting a potential downside of 4.81%. USG Corporation has a consensus price target of $31.00, suggesting a potential upside of 16.24%. Given USG Corporation’s higher probable upside, analysts clearly believe USG Corporation is more favorable than Armstrong World Industries.

Institutional and Insider Ownership

90.0% of USG Corporation shares are owned by institutional investors. 0.6% of Armstrong World Industries shares are owned by company insiders. Comparatively, 0.7% of USG Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Armstrong World Industries has a beta of 1.65, suggesting that its share price is 65% more volatile than the S&P 500. Comparatively, USG Corporation has a beta of 1.08, suggesting that its share price is 8% more volatile than the S&P 500.

Profitability

This table compares Armstrong World Industries and USG Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Armstrong World Industries 13.24% 49.73% 7.74%
USG Corporation 14.94% 13.57% 6.20%

Earnings and Valuation

This table compares Armstrong World Industries and USG Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Armstrong World Industries $1.28 billion 1.95 $255.10 million $3.08 15.29
USG Corporation $3.08 billion 1.24 $487.00 million $3.10 8.60

USG Corporation has higher revenue and earnings than Armstrong World Industries. USG Corporation is trading at a lower price-to-earnings ratio than Armstrong World Industries, indicating that it is currently the more affordable of the two stocks.

Summary

USG Corporation beats Armstrong World Industries on 8 of the 14 factors compared between the two stocks.

About Armstrong World Industries

Armstrong World Industries, Inc. (AWI) is a global producer of ceiling systems. The Company owns and operates the Building Products (Ceilings) segment. The Company designs, manufactures and sells ceiling systems (primarily mineral fiber, fiberglass wool and metal) around the world. Its products are used in commercial and institutional buildings. Its geographical segments include Americas (including Canada); Europe, Middle East and Africa (including Russia) (EMEA), and Pacific Rim. As of December 31, 2016, it had 15 manufacturing plants in eight countries, including six plants located throughout the United States. Its Americas segment sells products for use in single and multi-family housing. It sells commercial products to building materials distributors re-selling its products to contractors, subcontractors’ alliances, architect and design firms, and facility owners. Residential ceiling products are sold in the Americas primarily to wholesalers and retailers.

About USG Corporation

USG Corporation, through its subsidiaries, is a manufacturer and distributor of building materials. The Company’s segments include Gypsum, Ceilings and USG Boral Building Products (UBBP). It produces a range of products for use in new residential, new nonresidential, and residential and nonresidential repair and remodel construction, as well as products used in certain industrial processes. Its products are distributed through building materials dealers, home improvement centers and other retailers, specialty wallboard distributors, and contractors. Gypsum segment manufactures and markets gypsum and related products in the United States, Canada, Mexico and Latin America. Ceilings segment manufactures and markets interior systems products in the United States, Canada, Mexico and Latin America. The UBBP segment manufactures, distributes and sells certain building products, mines raw gypsum and sells natural and synthetic gypsum throughout Asia, Australasia and the Middle East.

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