Owens Corning Q3 Earnings: Buying Soaring NYSE:OC Stock Before Call?

in EARNINGS/INVESTING IDEAS by

Owens Corning (NYSE:OC) is scheduled to report Q3 earnings results before markets open for trading on October 28, 2020.

The company is expected to report earnings of $1.27/share on revenue of $1.794 billion. The consensus earnings per share (EPS) of $1.27/share is based on a poll of 20 analysts and represents a decline in eps of −21.8% over the same quarter last year, when the company reported earnings of $1.63/share.

The revenue forecast of $1.794 billion based on a poll of 17 analysts implies a year-over-year (YoY) decline in revenue of −4.7%. Last year the company reported $1.883 billion in revenue for the quarter.

Expected to report EPS contraction of −21.8% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,793.65 $1,883.00 −4.7%
EPS $1.27 $1.63 −21.8%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, missed 2 quarters, and met expectations 1 quarter.

What are your expectations from Owens Corning for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.28 $0.88 216.8% Beat
Q1, 2020 $0.53 $0.60 13.9% Beat
Q4, 2019 $1.13 $1.13 0% Met
Q3, 2019 $1.50 $1.63 8.6% Beat
Q2, 2019 $1.16 $1.31 13.1% Beat
Q1, 2019 $0.56 $0.54 −3.3% Missed
Q4, 2018 $1.27 $1.38 8.4% Beat
Q3, 2018 $1.65 $1.54 −6.7% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $61.25 $61.28 0.0% Increase
April 29, 2020 $40.10 $43.36 8.1% Increase
February 19, 2020 $62.99 $66.85 6.1% Increase
October 23, 2019 $63.37 $61.69 −2.7% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.38, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.38 implies a 0.0% chance of earnings manipulation.

Fundamentals And Technical Analysis

Owens Corning is currently trading at $73.22/share, down −1.4% for the day. The company is trading at approximately 95.6% of its 52-week high of $76.60/share. The company’s stock price is up 19.5% since the last earnings report and down −2.5% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 57.62 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:OC Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −13.23 and a forward P/E multiple of 19.22.

Owens Corning’s current share price also implies a price-to-book (P/B) multiple of 2.18. The following table summarizes some other key fundamental ratios:

Data as of October 21, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $73.22
P/E Ratio −13.2x
P/E Ratio (Fwd) 19.2x
PEG Ratio 0.1
Total Debt / Total Capital 30.9%
Levered Free Cash Flow $605 million
EV / EBITDA 9.3x

Finbox

Owens Corning is a mid-cap stock with a market capitalization of $7.909 billion and a total enterprise value of $10.962 billion. The company operates in the Industrials sector and the Building Products industry.

Owens Corning, together with its subsidiaries, produces and sells glass fiber reinforcements and other materials for composites; and residential, commercial, and industrial building materials worldwide. It operates in three segments: Composites, Insulation, and Roofing. The Composites segment manufactures, fabricates, and sells glass reinforcements in the form of fiber; and manufactures and sells glass fiber products in the form of fabrics, non-wovens, and other specialized products. Its products are used in pipe, roofing shingles, sporting goods, consumer electronics, telecommunications cables, boats, aviation, defense, automotive, industrial containers, and wind-energy applications in the building and construction, transportation, consumer, industrial, and power and energy markets. The Insulation segment manufactures and sells fiberglass insulation into residential, commercial, industrial, and other markets for thermal and acoustical applications; and manufactures and sells glass fiber pipe insulation, flexible duct media, bonded and granulated mineral fiber insulation, cellular glass insulation, and foam insulation used in above- and below-grade construction applications. This segment sells its products primarily to the insulation installers, home centers, lumberyards, retailers, and distributors under the Thermafiber, FOAMGLAS, Paroc, Owens Corning PINK, and FIBERGLAS Insulation brand names. The Roofing segment manufactures and sells residential roofing shingles, oxidized asphalt materials, and roofing components used in residential and commercial construction, and specialty applications, as well as synthetic packaging materials. This segment sells its products through distributors, home centers, lumberyards, retailers, and contractors, as well as to roofing contractors for built-up roofing asphalt systems and to manufacturers in automotive, chemical, rubber, and construction industries. Owens Corning was founded in 1938 and is headquartered in Toledo, Ohio.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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