With Strong Cash Flow, Owens-Corning Stock Poised to Rise?

Owens-Corning (OC) could be a good pick for your portfolio, with its high cash yield, good fundamentals, and discounted valuation. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market

What Is Happening With OC

OC stock is currently trading at P/S (Price-to-Sales) ratio that is at a meaningful discount to its 3-month and 2-year highs, and also below its 3-year average.

Here is what’s going well for the company. Owens Corning generated $1.8 billion in operating cash flow and $1.0 billion in free cash flow in 2025. It increased its quarterly dividend by 15%, marking 12 consecutive years of growth. Integration of its Doors business is exceeding synergy targets. Although Q4 2025 sales dipped 17% due to weaker residential demand and destocking, 2026 guidance aligns with full-year consensus, expecting market improvement in the second half through ongoing product innovation and operational efficiencies.

OC Has Good Fundamentals

• Good Cash Yield: Not many stocks offer free cash flow yield of 10.8%, but Owens-Corning stock does
• Strong Margin: Last 12 month operating margin of 15.7%
• Growth: Last 12 revenue growth of 21.7% – low growth, but this selection is all about high yield and margin
• Valuation: OC stock currently trading at 40% below 2Y high, 11% below 1M high, and at a PS lower than 3Y average.

Below is a quick comparison of OC fundamentals with S&P medians.

*LTM: Last Twelve Months

But What Is The Risk Involved?

While OC stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. The stock plunged 85% in the Global Financial Crisis, 57% during the 2018 Correction, and 54% in the Covid sell-off. Even the relatively milder Inflation Shock caused a 30% drop. No matter how strong the setup looks, big market disruptions can still hit hard. It’s a reminder that risk is always there, even for solid names. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read OC Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

For more details and our view, see Buy or Sell OC Stock.

Stocks Like OC

Not ready to act on OC? Consider these alternatives:

1. Broadridge Financial Solutions (BR)
2. Zebra Technologies (ZBRA)
3. Fortune Brands Innovations (FBIN)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. Dipped last month & meaningfully below 2Y high
3. Current P/S < last few year average
4. Strong operating margin with no instances of large margin collapse
5. High free cash flow yield

A portfolio of stocks with the criteria above would have performed has follows since 12/31/2016:

• Average 6-month and 12-month forward returns of 10.4% and 20.4% respectively
• Win rate (percentage of picks returning positive) of about 74% for 12-month period
• Strategy consistent across market cycles

Portfolios Beat Stock Picking

Stocks soar and sink – the key is staying invested. A balanced portfolio helps you ride market volatility, boosts gains and reduces single stock risk.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? HQ Portfolio has posted more than 105% in cumulative return since inception, with less risk versus the benchmark index, as evident in HQ Portfolio performance metrics.