Fundamental analysis
The company is one of the largest providers of various types of home and building insulation. IBP provides complete purchasing, transportation and installation of all products (waterproofing, fireproofing, fire doors, etc.). The diversification of the business consists in the wide portfolio of products and services that the company offers to both private customers and companies, from the purchase of goods to the actual implementation. The company has more than 10,000 employees.
The company operates only in the US and has branches in 48 states (240 branches in total) and is able to serve the complete needs of its customers from each branch.
The building materials and construction industry has a PMI above 50, the industry is thriving. New orders are coming in (the current reading for July is 55.0). Industry growth is steady. IBP is also doing well, with the share price up 50% since the beginning of the year alone.
The company has long term stable leadership, the CEO, CFO and COO have been in charge for over 20 years.
The IPO was in 2014.
The company pays dividends regularly.
Results
Current turnover distribution:
- 67% new residential projects
- 6% repairs
- 17% commercial buildings
- 6% rest
As of June 30, 2023, the company had a higher turnover ($2.757 billion) than for the full year 2022 ($2.670 billion). Turnover growth over the last 5 years has averaged 20%, up from 35.6% last year. IBP benefits from the synergies of its products and services in the market and also from its good contacts with major construction companies in the US market.
EBITDA is USD 462 million.
Net profit is USD241 million as of June 30, 2023, compared to USD223 million in 2022. The company has had positive earnings in every year for the past five years, including covid years.
The company will pay a dividend of $0.33 per share.
Technical analysis
According to the moving averages, the company has been in an uptrend since February 2023.
The RSI is in the neutral zone.
The price is currently at an interesting support. In 2022, this support acted as a resistance and the price bounced off it several times. Now there has been a flip, after the first bounce the price broke through and the resistance turned into a support. It is still holding. So the price level is significant.
Conclusion
Services are doing better in the US than in Europe. Companies operating in the insulation sector are helped by high energy prices, which force customers to save and reduce energy spending. IBP is thriving, its dominant position in the US market brings many economies of scale and its full service from purchasing to expert installation is a competitive advantage. The company’s revenues are growing regularly, and profitability over covid is a good indicator. Long-term leadership means that management knows the company well.
The current price on the support is interesting. If the support holds, the price can continue upwards. If it doesn’t hold, the price may fall. The stock has already had a 50% gain this year, which is more than the S&P 500.