Reviewing Arcosa (NYSE:ACA) and TopBuild (NYSE:BLD)

TopBuild (NYSE:BLD) and Arcosa (NYSE:ACA) are both construction companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, risk, profitability, earnings, valuation and dividends.

Insider and Institutional Ownership

95.7% of TopBuild shares are owned by institutional investors. Comparatively, 90.7% of Arcosa shares are owned by institutional investors. 0.4% of TopBuild shares are owned by company insiders. Comparatively, 2.0% of Arcosa shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

TopBuild has a beta of 1.66, meaning that its share price is 66% more volatile than the S&P 500. Comparatively, Arcosa has a beta of 0.98, meaning that its share price is 2% less volatile than the S&P 500.

Earnings & Valuation

This table compares TopBuild and Arcosa”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TopBuild	$5.33 billion	2.08	$622.60 million	$20.31	19.35
Arcosa	$2.57 billion	1.76	$93.70 million	$1.88	49.16

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for TopBuild and Arcosa, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TopBuild	0	4	8	1	2.77
Arcosa	0	0	3	0	3.00

TopBuild presently has a consensus price target of $395.17, indicating a potential upside of 0.53%. Arcosa has a consensus price target of $112.00, indicating a potential upside of 21.20%. Given Arcosa’s stronger consensus rating and higher possible upside, analysts plainly believe Arcosa is more favorable than TopBuild.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
TopBuild	11.40%	28.32%	12.73%
Arcosa	3.45%	6.25%	3.19%

Summary

TopBuild beats Arcosa on 11 of the 15 factors compared between the two stocks.

About TopBuild

TopBuild Corp., together with its subsidiaries, engages in the installation and distribution of insulation and other building material products to the construction industry. The company operates in two segments, Installation and Specialty Distribution. It provides insulation products and accessories, glass and windows, rain gutters, garage doors, fireplaces, roofing materials, closet shelving, and other products. The company also offers insulation installation services for fiberglass batts and rolls, blown-in loose fill fiberglass, polyurethane spray foam, and blown-in loose fill cellulose applications. In addition, it distributes building and mechanical insulation, insulation accessories, and other building product materials for the residential, commercial, and industrial end markets. The company serves single-family homebuilders, single-family custom builders, multi-family builders, commercial general contractors, remodelers, and individual homeowners, as well as insulation contractors, gutter contractors, weatherization contractors, other contractors, dealers, metal building erectors, and modular home builders. It operates installation branches and distribution centers in the United States and Canada. The company was formerly known as Masco SpinCo Corp. and changed its name to TopBuild Corp. in March 2015. TopBuild Corp. was incorporated in 2015 and is headquartered in Daytona Beach, Florida.

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.