Installed Building Products (NYSE:IBP – Get Free Report) and Toll Brothers (NYSE:TOL – Get Free Report) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, valuation, profitability, risk, dividends, earnings and institutional ownership.
Profitability
This table compares Installed Building Products and Toll Brothers’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Installed Building Products | 8.46% | 42.12% | 13.20% |
| Toll Brothers | 11.14% | 14.21% | 8.24% |
Risk & Volatility
Installed Building Products has a beta of 1.7, meaning that its share price is 70% more volatile than the S&P 500. Comparatively, Toll Brothers has a beta of 1.35, meaning that its share price is 35% more volatile than the S&P 500.
Valuation and Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Installed Building Products | $2.97 billion | 2.21 | $265.40 million | $9.29 | 26.57 |
| Toll Brothers | $10.97 billion | 1.25 | $1.35 billion | $12.46 | 11.80 |
Toll Brothers has higher revenue and earnings than Installed Building Products. Toll Brothers is trading at a lower price-to-earnings ratio than Installed Building Products, indicating that it is currently the more affordable of the two stocks.
Dividends
Installed Building Products pays an annual dividend of $1.56 per share and has a dividend yield of 0.6%. Toll Brothers pays an annual dividend of $1.04 per share and has a dividend yield of 0.7%. Installed Building Products pays out 16.8% of its earnings in the form of a dividend. Toll Brothers pays out 8.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Toll Brothers has increased its dividend for 5 consecutive years. Toll Brothers is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Ratings
This is a summary of current ratings and price targets for Installed Building Products and Toll Brothers, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Installed Building Products | 1 | 10 | 1 | 0 | 2.00 |
| Toll Brothers | 1 | 4 | 15 | 1 | 2.76 |
Installed Building Products presently has a consensus target price of $249.30, indicating a potential upside of 0.98%. Toll Brothers has a consensus target price of $166.25, indicating a potential upside of 13.07%. Given Toll Brothers’ stronger consensus rating and higher possible upside, analysts plainly believe Toll Brothers is more favorable than Installed Building Products.
Institutional & Insider Ownership
99.6% of Installed Building Products shares are held by institutional investors. Comparatively, 91.8% of Toll Brothers shares are held by institutional investors. 13.8% of Installed Building Products shares are held by company insiders. Comparatively, 1.4% of Toll Brothers shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Summary
Toll Brothers beats Installed Building Products on 11 of the 18 factors compared between the two stocks.
About Installed Building Products
Installed Building Products, Inc., together with its subsidiaries, engages in the installation of insulation, waterproofing, fire-stopping, fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving and mirrors, and other products in the United States. It operates through Installation, Distribution, and Manufacturing operation segments. The company offers a range of insulation materials, such as fiberglass and cellulose, and spray foam insulation materials. It is also involved in the installation of insulation and sealant materials in various areas of a structure, which includes basement and crawl space, building envelope, attic, and acoustical applications. In addition, the company installs a range of caulk and sealant products that control air infiltration in residential and commercial buildings; and waterproofing options, including sheet and hot applied waterproofing membranes, as well as deck coating, bentonite, and air and vapor systems. Further, it distributes spray foam insulation, metal building insulation, residential insulation, and mechanical and fabricated Styrofoam insulation, as well as accessories and equipment used in the insulation installation process; and manufactures cellulose insulation and specialty industrial fibers. It serves homebuilders, multi-family and commercial and agricultural construction firms, individual homeowners, and repair and remodeling contractors. The company was formerly known as CCIB Holdco, Inc. Installed Building Products, Inc. was founded in 1977 and is based in Columbus, Ohio.
About Toll Brothers
Toll Brothers, Inc., together with its subsidiaries, designs, builds, markets, sells, and arranges finance for a range of detached and attached homes in luxury residential communities in the United States. It designs, builds, markets, and sells condominiums through Toll Brothers City Living. The company also develops a range of single-story living and first-floor primary bedroom suite home designs, as well as communities with recreational amenities, such as golf courses, marinas, pool complexes, country clubs, and fitness and recreation centers; and develops, operates, and rents apartments. In addition, it provides various interior fit-out options, such as flooring, wall tile, plumbing, cabinets, fixtures, appliances, lighting, and home-automation and security technologies. Further, the company owns and operates architectural, engineering, mortgage, title, land development, insurance, smart home technology, landscaping, lumber distribution, house component assembly, and component manufacturing operations. It serves luxury first-time, move-up, empty-nester, active-adult, and second-home buyers. Toll Brothers, Inc. was founded in 1967 and is headquartered in Fort Washington, Pennsylvania.
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