Reviewing Installed Building Products (NYSE:IBP) and Toll Brothers (NYSE:TOL)

Toll Brothers (NYSE:TOL) and Installed Building Products (NYSE:IBP) are both consumer discretionary companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, institutional ownership, dividends, profitability, analyst recommendations, earnings and valuation.

Volatility & Risk

Toll Brothers has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500. Comparatively, Installed Building Products has a beta of 1.7, suggesting that its stock price is 70% more volatile than the S&P 500.

Profitability

This table compares Toll Brothers and Installed Building Products’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Toll Brothers	11.14%	14.21%	8.24%
Installed Building Products	8.46%	42.12%	13.20%

Institutional & Insider Ownership

91.8% of Toll Brothers shares are held by institutional investors. Comparatively, 99.6% of Installed Building Products shares are held by institutional investors. 1.4% of Toll Brothers shares are held by company insiders. Comparatively, 13.8% of Installed Building Products shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings for Toll Brothers and Installed Building Products, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Toll Brothers	1	4	15	1	2.76
Installed Building Products	1	10	1	0	2.00

Toll Brothers presently has a consensus target price of $166.25, indicating a potential upside of 13.07%. Installed Building Products has a consensus target price of $249.30, indicating a potential upside of 0.98%. Given Toll Brothers’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Toll Brothers is more favorable than Installed Building Products.

Valuation & Earnings

This table compares Toll Brothers and Installed Building Products”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Toll Brothers	$10.97 billion	1.25	$1.35 billion	$12.46	11.80
Installed Building Products	$2.97 billion	2.21	$265.40 million	$9.29	26.57

Toll Brothers has higher revenue and earnings than Installed Building Products. Toll Brothers is trading at a lower price-to-earnings ratio than Installed Building Products, indicating that it is currently the more affordable of the two stocks.

Dividends

Toll Brothers pays an annual dividend of $1.04 per share and has a dividend yield of 0.7%. Installed Building Products pays an annual dividend of $1.56 per share and has a dividend yield of 0.6%. Toll Brothers pays out 8.3% of its earnings in the form of a dividend. Installed Building Products pays out 16.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Toll Brothers has raised its dividend for 5 consecutive years. Toll Brothers is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Toll Brothers beats Installed Building Products on 11 of the 18 factors compared between the two stocks.

About Toll Brothers

Toll Brothers, Inc., together with its subsidiaries, designs, builds, markets, sells, and arranges finance for a range of detached and attached homes in luxury residential communities in the United States. It designs, builds, markets, and sells condominiums through Toll Brothers City Living. The company also develops a range of single-story living and first-floor primary bedroom suite home designs, as well as communities with recreational amenities, such as golf courses, marinas, pool complexes, country clubs, and fitness and recreation centers; and develops, operates, and rents apartments. In addition, it provides various interior fit-out options, such as flooring, wall tile, plumbing, cabinets, fixtures, appliances, lighting, and home-automation and security technologies. Further, the company owns and operates architectural, engineering, mortgage, title, land development, insurance, smart home technology, landscaping, lumber distribution, house component assembly, and component manufacturing operations. It serves luxury first-time, move-up, empty-nester, active-adult, and second-home buyers. Toll Brothers, Inc. was founded in 1967 and is headquartered in Fort Washington, Pennsylvania.

About Installed Building Products

Installed Building Products, Inc., together with its subsidiaries, engages in the installation of insulation, waterproofing, fire-stopping, fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving and mirrors, and other products in the United States. It operates through Installation, Distribution, and Manufacturing operation segments. The company offers a range of insulation materials, such as fiberglass and cellulose, and spray foam insulation materials. It is also involved in the installation of insulation and sealant materials in various areas of a structure, which includes basement and crawl space, building envelope, attic, and acoustical applications. In addition, the company installs a range of caulk and sealant products that control air infiltration in residential and commercial buildings; and waterproofing options, including sheet and hot applied waterproofing membranes, as well as deck coating, bentonite, and air and vapor systems. Further, it distributes spray foam insulation, metal building insulation, residential insulation, and mechanical and fabricated Styrofoam insulation, as well as accessories and equipment used in the insulation installation process; and manufactures cellulose insulation and specialty industrial fibers. It serves homebuilders, multi-family and commercial and agricultural construction firms, individual homeowners, and repair and remodeling contractors. The company was formerly known as CCIB Holdco, Inc. Installed Building Products, Inc. was founded in 1977 and is based in Columbus, Ohio.