Owens Corning "Key takeaways from OC Milwaukee meetings" (Buy) Lovallo

Research evidence excerpt

Owens Corning "Key takeaways from OC Milwaukee meetings" (Buy) Lovallo

Forecast returns

Forecast price appreciation 45.3%

Forecast dividend yield 2.6%

Forecast stock return 48.0%

Market return assumption 8.9%

Forecast excess return 39.1%

Company Description

Owens Corning (OC), headquartered in Toledo, OH, is a leading global manufacturer of

roofing, insulation, and doors. The company is primarily focused on the R&R market and goes

to market with various brands, including PINK FIBERGLAS, TruDefinition, and Masonite.

Valuation Method and Risk Statement

Price Target Methodology: Our $174 PT on OC shares is based on an 2026e adj. EV/2027e

EBITDA multiple of roughly 8.5x and implies a 2027e P/E of roughly 14x.

Risks: 1) Insulation industry could lose discipline and add excess capacity to chase recent

demand, 2) a slower and more shallow than expected recovery in commercial construction

could negatively impact insulation demand, 3) fewer weather events could hurt demand for

replacement roofing, 4) slower industrial production could negatively impact Composite

demand, 5) new COVID variants may delay consumer willingness to allow professional

contractors into their homes, 6) slowing economic activity could lower consumer confidence

and cause delays in big-ticket purchases such as remodeling, 7) pricing power may be

insufficient to offset rising raw materials costs, 8) higher diesel costs could impact logistic

operation, 9) labor shortages could delay production and delivery schedules, 10) rising

interest rates could negatively impact new construction activity, 11) home values could

decline, negatively impacting home equity loan availability and confidence in reinvesting in

the home, 12) surge in COVID related home improvement activity may have pulled forward