StockCall Scrutinizes Owens Corning and Vulcan Materials: Industry Sees Growth and Acquisition Bids

Feb 20, 2013, 07:30 ET from

LONDON, February 20, 2013 /PRNewswire/ --

While cement is basic to the building industry, the category building materials includes any material used for construction purposes. These include natural products such as clay, rock, sand and wood as well as man-made products. Some man-made materials are fully synthetic while others may be a combination of natural and synthetic materials. Generally, these can be classified according to specialty trades such as structural, roofing, carpentry, plumbing and insulation. Two big names that stand out in this category are Owens Corning (NYSE: OC) and Vulcan Materials Company (NYSE: VMC). StockCall reviewed the solar industry and chose Owens Corning and Vulcan Materials for its technical coverage. These free reports can be seen for free at

General Building Materials & the Effect of Cost inflation

Future growth in the sector largely depends upon aggregate EBITDA growth, which in turn is affected by cost inflation. Cost inflation is one of the major factors that exert pressure on producers in the industry. This includes energy cost inflation as well as general cost inflation. Both are expected to continue to exert pressure on operating margins. The direct implication of this is that top-line growth in the industry depends largely on support by greater volumes. The general outlook for the industry, considering inflationary and recessionary pressures, is that it will grow modestly.

Owens Corning - Background

Owens Corning is a building materials company engaged primarily in manufacture of fiberglass insulation, asphalt and roofing materials. Business activity of Owens Corning is divided into two segments. The building materials segment accounts for 67% of total sales and comprises of insulating systems (34% of sales), roofing and asphalt (27%) and other building materials and services (6%) that includes masonry products and construction services. The composite solutions segments comprises primarily of reinforcement fiberglass used for reinforcing composite materials for transportation, marine, infrastructure, wind energy, electronics as well as for insulation purposes. Download the free research on Owens Corning by signing up now at  

Owens Corning is one of the biggest manufacturers in this space. Its fiberglass products are used in tubs, shingles, refrigerator containers, body panels in automobiles and a host other household and industrial products.  

The company was compelled to file Chapter 11 bankruptcy in 2000 in face of more than 450,000 personal injury lawsuits filed against it due to the use of asbestos in insulation products. However, it emerged from bankruptcy in 2006 and presently holds 50% market share in residential and industrial insulation products such as reinforced plastics and roofing insulation.

Owens Corning has a market cap of $5.12 billion, which is larger than some of the smaller-end components of S&P 500 Index. Owens Corning has returned 32.58% over the last three months. However, at CMP of $43.34, it is trading at a high P/E multiple of 60.19.

Vulcan Materials Company in Brief

Vulcan Materials, an Alabama-based building materials company, is the country's largest manufacturer of construction aggregates, largely crushed stone, sand and gravel. It operates in four segments - aggregates, cement, concrete and asphalt mix. Register for today's free analysis on Vulcan Materials Company at  

Vulcan Materials has a larger market cap ($5.78 billion) than Owens Corning and is also a dividend paying company. However, the company's dividend payouts have been declining and have come down from quarterly dividends 25 cents per quarter paid in 2009 to 1 cent per quarter in 2012.

Apart from the dividend payouts, VMC has returned 15% in the last one year and more than 13% over last three months. Late last year, its smaller competitor Martin Marietta Materials tried a hostile takeover of Vulcan at $5.1 billion, which was rejected. Marin is currently trying to do a friendly acquisition of its larger rival.

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