On Tuesday, RBC Capital updated its financial estimates for Owens Corning (NYSE: NYSE:OC), leading to a raised price target on the company's shares. The new target is set at $201.00, up from the previous $192.00, while the firm continues to recommend an Outperform rating for the stock.
The adjustment follows the completion of Owens Corning (NYSE:GLW)'s acquisition of DOOR, which has resulted in a revised forecast for the company's earnings per share. For fiscal year 2024, the earnings estimate has been slightly reduced to $14.86 from $15.09. This decrease accounts for increased expenses related to interest, depreciation, and amortization, as well as a lower volume of share buybacks, which are partially offset by earnings from the newly acquired DOOR.
Looking ahead to fiscal year 2025, RBC Capital anticipates an increase in Owens Corning's earnings per share to $15.70, up from a prior estimate of $15.06. The firm expects that the company will experience growth in synergies and that free cash flow will contribute to debt reduction.
The sale of Owens Corning's Glass Reinforcements (GR) segment is highlighted as a potential factor that could further improve the company's leverage situation and enable the resumption of capital return to shareholders.
Despite some concerns regarding the initial debt level from the acquisition and questions about the strategic fit and opportunities, RBC Capital believes that successful integration and synergy realization could lead to an upward trajectory for the stock.
Moreover, the shift from Composites to the higher margin and less capital-intensive Doors business is seen as a positive move that could warrant a reevaluation of the company's stock multiple.
InvestingPro Insights
Following RBC Capital's updated financial estimates for Owens Corning (NYSE: OC), it's worth noting that the company's management has been proactive in creating shareholder value, as evidenced by a history of share buybacks and a consistent increase in dividend payments. An InvestingPro Tip highlights that Owens Corning has raised its dividend for 5 consecutive years, which aligns with RBC's positive outlook on the company's ability to generate cash flow and reduce debt.
InvestingPro Data further underscores the company's financial health. Currently, Owens Corning’s market capitalization stands at $15.33 billion, with a solid P/E ratio of 14.19, which is adjusted to 12.3 for the last twelve months as of Q1 2024. Moreover, the company's dividend yield as of the most recent data is 1.36%, with an impressive dividend growth of 15.38% in the same period. These metrics indicate that Owens Corning is not only managing its debt wisely but also rewarding shareholders through dividends.
The company's stock performance has also been robust, trading near its 52-week high and showing a significant price uptick with a 63.2% return over the last year. This positive momentum, highlighted by a 36.48% return over the last six months, suggests investor confidence in Owens Corning's strategic decisions and market position.
For investors looking to delve deeper into Owens Corning's financials and future prospects, there are additional InvestingPro Tips available, including insights on cash flow and debt management. To explore these tips and enhance your investment strategy, visit https://www.investing.com/pro/OC and use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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