Stock Analysis & Valuation Owens Corning (O5Q.DE)

• Previous Close: €88.50
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	23.20	-74
Graham Formula	133.70	51

Strategic Investment Analysis

Company Overview

Owens Corning (O5Q.DE) is a leading global producer of insulation, roofing, and fiberglass composites, headquartered in Toledo, Ohio. The company operates across three key segments: Composites, Insulation, and Roofing. Its Composites segment manufactures glass fiber and glass mat products used in transportation, electronics, marine, infrastructure, and wind-energy markets. The Insulation segment offers thermal and acoustical batts, loosefill insulation, and foam sheathing under the well-known Owens Corning PINK FIBERGLAS brand. The Roofing segment specializes in laminate and strip asphalt roofing shingles, along with oxidized asphalt and synthetic packaging materials. Serving residential, commercial, and industrial markets, Owens Corning is a key player in the Basic Materials sector, particularly within the Steel industry. With a strong brand presence and a workforce of 20,000 employees, the company is positioned to capitalize on growing demand for energy-efficient building materials and sustainable infrastructure solutions.

Investment Summary

Owens Corning presents a mixed investment profile. On the positive side, the company generates robust revenue (€10.98 billion in the latest fiscal year) and maintains a solid net income (€647 million). Its diversified product portfolio across insulation, roofing, and composites provides resilience against sector-specific downturns. The company also delivers a healthy dividend (€2.46 per share), appealing to income-focused investors. However, risks include a high beta (1.58), indicating above-average volatility relative to the market, and significant total debt (€5.62 billion). The capital-intensive nature of its operations, evidenced by €647 million in capital expenditures, may pressure cash flows. Investors should weigh these factors against the company's strong market position and potential growth in energy-efficient construction materials.

Competitive Analysis

Owens Corning holds a competitive edge through its diversified product portfolio and strong brand recognition, particularly in insulation (PINK FIBERGLAS) and roofing materials. The company's vertical integration allows it to control quality and costs across its manufacturing processes. In the Composites segment, Owens Corning benefits from long-term relationships with shingle manufacturers and industrial clients, though it faces stiff competition from specialized fiberglass producers. The Insulation segment competes on energy efficiency and fire resistance, with products tailored to both residential and commercial markets. In Roofing, the company's focus on high-performance asphalt shingles differentiates it from lower-cost alternatives. However, Owens Corning's broad exposure to construction markets makes it susceptible to cyclical downturns in housing and infrastructure spending. Its competitors range from large multinationals with similar product lines to niche players focusing on specific materials or regions. The company's ability to innovate in sustainable building solutions (e.g., recycled materials, energy-saving products) will be critical to maintaining its competitive position amid increasing environmental regulations and shifting customer preferences.

Major Competitors

• Rockwool International (ROC): Rockwool is a strong competitor in insulation, specializing in stone wool products that offer superior fire resistance and soundproofing. While Owens Corning leads in fiberglass insulation, Rockwool's focus on sustainability and non-combustible materials gives it an edge in commercial construction. However, Rockwool's geographic reach is more concentrated in Europe, whereas Owens Corning has a broader North American presence.
• Johnson Matthey (JMAT.L): Johnson Matthey competes in advanced materials, including composites for automotive and industrial applications. Unlike Owens Corning, it emphasizes catalytic converters and battery materials, but overlaps in glass fiber technologies. Johnson Matthey's R&D focus on clean energy solutions poses long-term competition, though Owens Corning has deeper penetration in traditional construction markets.
• Beacon Roofing Supply (BECN): Beacon is a distributor rather than a manufacturer, but it competes indirectly by offering alternative roofing products. Its vast distribution network across North America challenges Owens Corning's direct sales model. Beacon's strength lies in logistics and customer service, whereas Owens Corning maintains control over product quality and innovation.
• Kadant Inc. (KAI): Kadant focuses on fiber-based products and recycling systems, overlapping with Owens Corning in certain industrial applications. Kadant's niche expertise in papermaking and recycling equipment differentiates it, but Owens Corning's scale and brand recognition in construction materials give it broader market access.
• Aspen Aerogels (APNHY): Aspen Aerogels competes in high-performance insulation, particularly for energy-intensive industries like oil and gas. Its aerogel technology offers superior thermal properties compared to traditional fiberglass, but at higher costs. Owens Corning's cost-effective solutions dominate mainstream construction, while Aspen targets specialized, high-margin applications.