Critical Comparison: Arcosa (NYSE:ACA) versus Frontdoor (NASDAQ:FTDR)

Arcosa (NYSE:ACA) and Frontdoor (NASDAQ:FTDR) are both mid-cap construction companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitability, analyst recommendations, institutional ownership and risk.

Valuation & Earnings

This table compares Arcosa and Frontdoor”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arcosa	$2.88 billion	2.11	$208.40 million	$4.53	27.40
Frontdoor	$2.09 billion	2.06	$255.00 million	$3.49	17.62

Frontdoor has lower revenue, but higher earnings than Arcosa. Frontdoor is trading at a lower price-to-earnings ratio than Arcosa, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

90.7% of Arcosa shares are held by institutional investors. 1.8% of Arcosa shares are held by insiders. Comparatively, 1.6% of Frontdoor shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk & Volatility

Arcosa has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500. Comparatively, Frontdoor has a beta of 1.55, indicating that its stock price is 55% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Arcosa and Frontdoor, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arcosa	1	1	2	1	2.60
Frontdoor	0	3	3	1	2.71

Arcosa currently has a consensus target price of $132.50, indicating a potential upside of 6.74%. Frontdoor has a consensus target price of $68.60, indicating a potential upside of 11.54%. Given Frontdoor’s stronger consensus rating and higher possible upside, analysts clearly believe Frontdoor is more favorable than Arcosa.

Profitability

This table compares Arcosa and Frontdoor’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arcosa	7.88%	8.52%	4.41%
Frontdoor	12.22%	118.62%	14.20%

Summary

Frontdoor beats Arcosa on 8 of the 14 factors compared between the two stocks.

About Arcosa

Arcosa, Inc., together with its subsidiaries, provides infrastructure-related products and solutions for the construction, engineered structures, and transportation markets in the United States. It operates through three segments: Construction Products, Engineered Structures, and Transportation Products. The Construction Products segment offers natural and recycled aggregates; specialty materials; and construction site support equipment, including trench shields and shoring products for residential and non-residential construction, and specialty/other products, as well as for infrastructure construction. The Engineered Structures segment offers utility structures, wind towers, traffic structures, and telecommunication structures for electricity transmission and distribution, wind power generation, highway road construction, and wireless communication markets. The Transportation Products segment offers inland barges, fiberglass barge covers, winches, marine hardware, and steel components for railcars and transportation equipment; cast components for industrial and mining sectors; and axles, circular forgings, and coupling devices for freight, tank, locomotive, and passenger rail transportation equipment, as well as other industrial uses. Arcosa, Inc. was incorporated in 2018 and is headquartered in Dallas, Texas.

About Frontdoor

Frontdoor, Inc. provides home warranties in the United States in the United States. Its customizable home warranties help customers protect and maintain their homes from costly and unplanned breakdowns of essential home systems and appliances. The company’s home warranty customers subscribe to an annual service plan agreement that covers the repair or replacement of principal components of approximately 20 home systems and appliances, including electrical, plumbing, water heaters, refrigerators, dishwashers, and ranges/ovens/cooktops, as well as electronics, pools, and spas and pumps; and heating, ventilation, and air conditioning systems. It also offers on-demand home services and a one-stop app experience for home repair and maintenance; and Streem technology, an app that empowers homeowners by connecting them in real time through video chat with qualified experts to diagnose and solve their problems. The company serves homeowners under the Frontdoor, American Home Shield, HSA, OneGuard, Landmark Home Warranty, Frontdoor logo, and Streem brands. The company was founded in 1971 and is headquartered in Memphis, Tennessee.