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Installed Building (IBP) Rides on Central Aluminum Supply Buyout

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Installed Building Products, Inc. (IBP - Free Report) has acquired a distributor of gutter supplies and accessories — Central Aluminum Supply Corporation and Central Aluminum Supply of North Jersey, LLC ("CAS") — for an undisclosed amount.

IBP’s share price gained 1.9% during the trading session on Apr 11, 2022.

Key Takeaways

CAS is based in Trenton, NJ, and distributes gutter supplies and accessories to residential, multifamily as well as commercial markets. CAS mainly caters to the existing or retrofit construction projects across the U.S. Northeast and Mid-Atlantic.

IBP, a leading installer of insulation and complementary building products, will be able to add $45 million of revenues annually with this buyout, while expanding its reach into new markets.

IBP’s Acquisition Drive

Acquisitions have been a preferred mode of expansion for IBP for years. The company’s persistent focus on prioritizing profitable growth through acquiring well-run installers of insulation and complementary building products bodes well.

Recently, IBP acquired Pisgah Insulation and Fireplaces of NC, LLC. This acquisition will expand IBP’s reach in North Carolina. Based in Mills River, NC, Pisgah — with annual revenues of $8.5 million — mainly installs spray foam insulation, fiberglass insulation and fireplaces in new residential homes in the Asheville, NC market.

In 2021, the company wrapped up 12 acquisitions, representing approximately $211 million of annual revenues, more than doubling IBP’s $100 million acquired revenue target for 2021. In 2022, IBP expects to generate at least $100 million of revenues. So far in 2022, the company has acquired approximately $54 million of annual revenues.

Zacks Investment Research
Image Source: Zacks Investment Research

Coming to price performance, shares of this Zacks Rank #4 (Sell) firm have lost 43.3% year to date compared with the Zacks Building Products – Miscellaneous industry’s 19.7% decline. IBP has been facing the heat of inflationary pressure like other industry players, thereby resulting in margin compression as materials, particularly spray foam and several complementary installed products, continued to be difficult to source. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some Better-Ranked Stocks in the Same Space

Owens Corning (OC - Free Report) currently carries a Zacks Rank #2 (Buy). OC’s earnings topped the consensus mark in all the last four quarters, with the average being 15.5%.

Earnings for Owens Corning are expected to increase 40.5% in 2022.

Otis Worldwide Corporation (OTIS - Free Report) currently carries a Zacks Rank #2. OTIS’ earnings topped the consensus mark in all the last four quarters, with the average being 9.7%.

Earnings for OTIS are expected to increase 9% in 2022.

PGT Innovations, Inc. (PGTI - Free Report) currently carries a Zacks Rank #2. PGTI’s earnings topped the consensus mark in three of the last four quarters while missed on one occasion, with the average surprise being 4.1%.

Earnings for OTIS are expected to increase 62.1% in 2022.