July 11, 2010 - Owens Corning (OC-NYSE) through its subsidiaries, provides composite and building materials systems worldwide. It operates in two segments, Composites and Building Materials.

The Building Materials segment manufactures and sells fiberglass insulation into residential, commercial, industrial, and other markets for both thermal and acoustical applications. It also offers glass fiber pipe insulation, and energy flexible duct media and foam insulation products, such as thermal and acoustical batts, loose fill insulation, foam sheathing, and accessories used in construction applications; manufactures residential roofing shingles and oxidized asphalt materials used in residential and commercial construction and specialty applications; and provides stone and brick veneer building products, and construction services for the home remodeling and new construction industries. This segment sells to insulation installers, home centers, lumberyards, retailers, distributors, contractors, and other manufacturers. The company was founded in 1938 and is headquartered in Toledo, Ohio.

The last 2 years have seen earnings erode. In 2007, they were $1.32, then went to $1.17, followed by $1.14 last year. But things are about to change, for the better. This year, 12 analysts have a consensus estimate of $2.06, an improvement of 81%, then see next year delivering $2.66, up another 29%. Quarterly earnings will be out on August 4. For the second quarter, expect 60 cents a share, better than the 49 cents of last year's second period. For the third quarter, look for 70 cents compared to 61 cents last year in the third.

Sales should rebound robustly as well. Last year, they were $4.803 billion, down from $5.847 billion in 2008. But this year, analysts see $5.4 billion, then $5.91 billion next year.

Investors now believe in this stock's recovery. Early in 2009, that was hardly the case. The stock traded at $5.10 before turning around. It reached $28.60 in the middle of 2008 so the drop was fast and hard. But the rebound has been no less impressive, sending the stock recently to an all-time high of $37.40. Now, it's off about 20% from that level.

More numbers: Market Cap is $3.77 billion. While the Trailing P/E is high at 27, the Forward P/E is a relatively low 11. Price to book is 1.31. Book value is $22.32. In the last 12 months, Operating margin was 6.91% while the Profit margin was 2.8%. Return on assets was 3%. There's $463 million in cash which is $3.61 a share. Total debt is $2.2 billion or 43% of capital. Current ratio is 1.99. Beta is a scary 2.36. In the last 52 weeks, the stock is up 131.53%. There are 128.32 million shares outstanding with a Float of 96.83 million. Insiders own 16.71%. Institutions have 84.70% of the float. There is no dividend.

Owens Corning is a great turnaround story with more of the story to be told. Even with a slow global economy, the company improved earnings noticably. Imagine how well it will do when there is a real recovery.

- Company Web site: www.owenscorning.com

Ted Allrich