- Wondering whether Owens Corning at around US$103 per share still offers value, or if the best days for this price are behind it? This article focuses squarely on what the current valuation is really telling you.
- The stock is roughly flat over the last week at a 0.3% gain, but that comes after a 22.6% decline over 30 days and a 28.0% decline over the past year, which can change how investors think about both risk and potential future returns.
- Recent headlines around Owens Corning have centered on its position in the US construction and building products market, including commentary on how demand conditions and input costs are affecting sector players. This backdrop has kept attention on whether companies like Owens Corning are being priced cautiously or whether there is a mismatch between share prices and business fundamentals.
- In this context, Owens Corning scores 5 out of 6 on Simply Wall St's valuation checks, giving it a value score of 5. The next sections will walk through the key valuation methods behind that score while also pointing you to an even richer way of judging value at the end of the article.
Find out why Owens Corning's -28.0% return over the last year is lagging behind its peers.
Approach 1: Owens Corning Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model takes projections of the cash a company is expected to generate in the future and discounts those amounts back to today to estimate what the business might be worth right now.
For Owens Corning, Simply Wall St uses a 2 Stage Free Cash Flow to Equity model. The latest twelve month Free Cash Flow is about $1.07b. Analysts provide cash flow estimates out to 2027, including a projected $873.04m in Free Cash Flow for the year ending 2027. Beyond that, Simply Wall St extrapolates cash flows out to 2035, with ten year projections ranging from about $783.15m to $797.28m, each discounted back to a present value.
Putting all of those discounted projections together gives an estimated intrinsic value of around $120.01 per share. Compared with the current share price of about $103, the model implies that Owens Corning trades at a 13.9% discount, which indicates that the shares may be undervalued on this DCF view.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Owens Corning is undervalued by 13.9%. Track this in your watchlist or portfolio, or discover 48 more high quality undervalued stocks.
Approach 2: Owens Corning Price vs Sales
For companies that are generating revenue but where earnings can be influenced by accounting items or cyclicality, the P/S ratio is a useful way to compare what you are paying for each dollar of sales.
Investors usually expect higher growth and lower risk companies to justify a higher “normal” or “fair” P/S multiple, while slower growth or higher risk businesses tend to trade on lower multiples. So context really matters when you look at a single number.
Owens Corning currently trades on a P/S ratio of 0.82x. That sits below the Building industry average P/S of 1.98x and also below the peer average of 3.35x. Simply Wall St goes a step further and estimates a Fair Ratio of 1.54x for Owens Corning. This proprietary figure reflects factors such as the company’s earnings growth profile, profit margins, industry, market cap and risk characteristics, rather than just lining it up against a broad peer group.
Because the Fair Ratio of 1.54x is materially higher than the current 0.82x P/S, the shares screen as undervalued on this P/S framework.
Result: UNDERVALUED
P/S ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.
Upgrade Your Decision Making: Choose your Owens Corning Narrative
Earlier it was mentioned that there is an even better way to understand valuation, so Narratives on Simply Wall St let you attach a clear story about Owens Corning to the numbers by connecting your assumptions for future revenue, earnings and margins to a forecast and then to a Fair Value that you can compare with the current share price.
On the Community page, Narratives are set up so you can see different stories side by side. For example, one investor might lean toward the more bullish Fair Value of US$166 based on higher earnings expectations, while another leans toward the more cautious Fair Value of US$110. Each Narrative then updates as new earnings, guidance or news arrives, so you always see how fresh information affects the gap between Fair Value and Price.
Do you think there's more to the story for Owens Corning? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com