Installed Building Products, Inc. (IBP): what the price assumes

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/IBP

Headline

Field	Value
Ticker	IBP
Company	Installed Building Products, Inc.
Current price	$232.26/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Operating margin (value-band context)	5.6%
Operating margin today	12.7%
Margin compression (value-band)	-7.1pp
Implied growth	24.6%
Multiple paid	19x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 10.8% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.9pp.

Reconcile: at the x-ray's 9.3% required return this reads ~14.2%/yr; the models below use their own rates.

How unusual the bet is: elevated

Reference	Value
vs own history	-0.36σ
sustained it ~5 years at this level	31%
implied end-window share	0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	1.86x	4	expensive
Earnings	2.35x	5	expensive
Relative	1.37x	5	expensive
Growth	1.50x	4	expensive

Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.9%); the inversion above states its own rate.

Per-Model Detail (n=18)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$127.20	1.83x	yes	FCF base $0.3B, growth 0% (input: historical growth), terminal g 0.5%, WACC 7.9%, 5yr projection
DCF Exit Multiple	Growth	$207.19	1.12x	yes	Exit EV/EBITDA: 13.8x / 15.8x / 17.8x (bear / base = today's held flat / bull), 5yr
Relative Valuation	Relative	$170.02	1.37x	yes	P/E 18x (static sector reference · 2026-04), scenarios: 15.3x / 18.0x / 20.7x (bear / base = reference held flat / bull), EV/EBITDA 12x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	$163.84	1.42x	yes	Stage 1: 5% for 5yr, Stage 2: 3.5% perpetual
Simple Excess Return	Asset	$102.15	2.27x	yes	BV/sh $24.75, ROE (TTM) 38.2%, ke 9.3%
Two-Stage Excess Return	Asset	$227.20	1.02x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$147.24	1.58x	yes	Rev $2.9B, growth 0% (input: historical growth; tapered), Terminal P/S: 1.8x / 2.1x / 2.4x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair Value	Relative	$112.32	2.07x	yes	EPS $9.36, growth 5% (input: historical EPS growth), PEG=5.43 (Overvalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	$89.15	2.61x	yes	Normalized EBIT (5y avg op income, one-time charges added back) $0.34B × (1−26%) / WACC 7.9% → EPV (no growth)
Residual Income	Asset	$160.88	1.44x	yes	BV $24.75 + 5yr PV of (ROE (TTM) 38.2% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham Number	Asset	$72.20	3.22x	yes	√(22.5 × EPS $9.36 × BVPS $24.75) — Graham's conservative floor
EV/EBITDA Relative	Relative	$169.40	1.37x	yes	EBITDA $0.44B × sector EV/EBITDA 12.0x
FCF Yield	Earnings	$99.01	2.35x	yes	FCF $314.6M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$90.47	2.57x	yes	SBC-adj FCF $0.29B (FCF $0.31B − SBC $0.02B) capitalized at Kₑ
Ben Graham Formula	Earnings	$137.64	1.69x	yes	EPS $9.36 × (8.5 + 2×4.5%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	$9.58	24.24x	yes	BV $24.75 × (ROIC 3.0% / WACC 7.9%) (excluded from median)
P/Sales Sector	Relative	$273.17	0.85x	yes	Revenue $2.95B × sector P/S 2.5x
PEG Fair Value	Relative	$63.50	3.66x	yes	EPS $9.36 × (PEG 1.5 × growth 4.5% (input: historical EPS growth)) → PE 6.8x
Earnings Yield	Earnings	$101.19	2.30x	yes	EPS $9.36 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net debt	$607.3m
Net debt / NOPAT (after-tax)	2.20x
Net debt / operating income (pre-tax)	1.62x
Interest coverage	11.1x
Share count CAGR (buyback)	-2.3%
Burning cash	no

Bullet Takeaways

• Installed Building Products is an insulation installer whose fortunes track the housing cycle, and that cycle just turned against it: single-family starts fell 6% in the first quarter of 2026, dragging revenue down 3.5% to $660.5 million and earnings per share to $1.29 from $1.64.
• The offsetting strength is diversification: commercial installation sales grew at a double-digit rate with heavy commercial up more than 20%, and multifamily starts rose 21%, which cushions the single-family slowdown.
• Watch the acquisition machine: IBP completed four deals in the quarter and aims to add at least $100 million of annual acquired revenue in 2026, the lever it uses to grow through a soft housing market.

Bull Case

Valuing a building-products installer requires reading the housing cycle, not the trailing quarter, and that is where IBP gets interesting. The company sits at the back end of new-home construction, installing insulation and related products after the frame goes up, so its volume rises and falls with housing starts. The trailing numbers capture a single-family market that just contracted, which means the earnings the methods are valuing are cyclically depressed rather than representative. The right question is not what IBP earns at the bottom of a single-family slowdown but what it earns across the cycle, and across the cycle this is a high-return business: return on equity runs about 38% and the operating margin is 12.7%, strong for a labor-intensive installation business.

The diversification away from single-family is the bull's most concrete near-term point. In the first quarter of 2026, even as single-family softened, the commercial end market grew at a double-digit rate, with heavy commercial installation sales up more than 20%, and multifamily starts rose 21%. A pure single-family installer would have seen revenue fall harder; IBP's revenue declined only 3.5% to $660.5 million because the other end markets are picking up the slack. That mix shift is deliberate, and it makes the business less of a one-way bet on single-family starts than it was a few years ago.

The acquisition engine is how IBP grows when the market does not. The company completed four acquisitions in the quarter, Biomax Spray Foam, Thermo-Tech Mechanical Insulation, Northstar Comfort Services, and Waterproofing, Inc., expected to add about $28 million of annual revenue, and it targets at least $100 million of acquired annual revenue in 2026. Buying small, local installers at sensible multiples and folding them into a national platform is a proven roll-up model in a fragmented industry, and IBP has the balance sheet for it: net debt of about $607 million sits at a comfortable 1.6 times operating income, with interest coverage above eleven times. Management lifted the dividend and refinanced debt during the quarter, and the share count has fallen at about 2.3% a year. The bull case is that the cycle turns back up, the acquired branches season, and the through-cycle earnings power reasserts itself well above what the depressed quarter shows.

Bear Case

The methods disagree in a way that is worth taking seriously, and the conservative ones are likely the more honest read. No family of valuation method reaches today's $218.17 price (June 27, 2026), but the more telling split is between the models that capitalize current profit and the models that lean on returns. The earnings-power method, capitalizing normalized operating profit with no growth, lands near $90 per share. The zero-growth cash-flow methods land near $99. The Graham number lands near $72. These are the conservative lenses, and they cluster far below the price because they refuse to extrapolate. The optimistic models that reach toward the price do so by crediting either the high return on equity or continued growth, and that is exactly the assumption a cyclical downturn calls into question. When the durable, no-growth lenses say a stock is worth less than half its price, the burden of proof sits on the growth assumption.

The return-on-equity figure that flatters IBP hides a weaker underlying number. Return on equity is about 38%, but return on invested capital is only about 3.0%, well below the cost of capital. That gap is the acquisition strategy showing through: years of buying installers has loaded the balance sheet with goodwill and intangibles, so the equity base is thin relative to the capital actually deployed, which inflates the equity return while the return on total invested capital tells the truer story. A roll-up that earns 3% on invested capital is creating value through leverage and multiple arbitrage, not through superior operations, and that model works only as long as acquisition multiples stay low and the integrated branches perform.

The cyclical risk is live, not theoretical, and the recent quarter is the evidence. Single-family starts fell 6% year over year, revenue declined, net income dropped to $34.8 million from $45.4 million, and the stock fell sharply on an earnings miss. Gross margin slipped to 32.1% from 32.7% on higher labor, vehicle, insurance, and freight costs. Housing is rate-sensitive and the single-family market can stay soft for an extended stretch if mortgage rates remain elevated. The price assumes the company holds elevated growth for roughly five years, a demanding bet for a business whose largest end market is contracting. The downside is not solvency, the balance sheet is sound, it is that a cyclical installer priced above what any standard method supports, in the early innings of a single-family downturn, has the multiple and the cycle working against it at the same time.

Valuation

The price is betting on growth that the current housing market is not delivering. The inversion reads the price as requiring the company to sustain elevated operating-profit growth for roughly five years, which is a demanding assumption for a cyclical installer whose largest end market, single-family construction, just contracted. The operating margin of 12.7% is solid for the business, but the bet embedded in the price is about persistence of growth through a soft patch, and that persistence reads as elevated relative to what a housing-cycle-dependent business reliably delivers.

How far the price sits from the methods is wide and consistent, and the pattern is the signal. No family of method reaches $218.17. The asset and earnings-power lenses, reading book value and capitalizing current profit, land roughly between $72 and $160 per share, with the most conservative durable models near $90 to $99. Peer multiples, using a sector earnings multiple near 18 times, land around $170. Only the most growth-favorable readings approach the price, and they do so by crediting the high return on equity or continued expansion. The spread between the price and the conservative lenses is the cyclical-growth premium, and it is large, roughly two to three times on the earnings-power methods. A useful caution sits in the return figures: return on equity of about 38% looks exceptional, but return on invested capital of about 3.0% reveals how much of that equity return rests on an acquisition-loaded, goodwill-heavy balance sheet rather than on operating quality.

Solvency is the clear strength and bounds the downside. Net debt of about $607 million sits at a comfortable 1.6 times trailing operating income, interest coverage runs above eleven times, and the company refinanced debt and lifted its dividend in the quarter while the share count fell at about 2.3% a year. The balance sheet can carry the acquisition strategy through a downturn. What it cannot do is make the price cheap against a cyclically soft single-family market. The decisive number is the gap between a price above every standard method and a housing cycle that is currently working against the growth the price requires.

Catalysts

Installed Building Products reported first-quarter 2026 results and the stock fell sharply, dropping more than 10% on an earnings miss. Revenue declined 3.5% to $660.5 million, net income fell to $34.8 million from $45.4 million, and diluted earnings per share came in at $1.29 versus $1.64 a year earlier. The driver was the single-family housing market: U.S. single-family starts fell 6% year over year. Gross margin slipped to 32.1% from 32.7% on higher labor, vehicle, insurance, and freight costs, partly offset by lower material costs.

The forward story has two threads. The first is the end-market mix: commercial installation grew at a double-digit rate, heavy commercial sales rose more than 20%, and multifamily starts were up 21%, all of which cushion the single-family weakness. The second is the acquisition program: IBP completed four deals in the quarter adding about $28 million of annual revenue and targets at least $100 million of acquired annual revenue in 2026, alongside a dividend increase and a debt refinancing. The watch items are mortgage rates and single-family starts, which set the direction of the core business, and the pace and pricing of acquisitions, which is how IBP intends to grow while the largest part of its market stays soft.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• BLD (TopBuild Corp)
• FY2025 10-K: , which generally drive increased demand for our offerings. ​ 19 ​ Table of Contents Risks Relating to the Industries in Which We Operate ​ Our business relies on residential new construction, commercial construction, and industrial manufacturing activity, and to a lesser extent on residential and commercial…
• FY2025 10-K: …has historically followed different cycles than residential new construction. ​ 6 ​ Table of Contents Strong local presence. Competition for the installation and sale of insulation and other building products to builders occurs in localized geographic markets throughout the U.S. and Canada. Builders and contractors…
• BLDR (Builders FirstSource, Inc.)
• FY2025 10-K: …in the future, including inventory storage or "just-in-time" delivery to reduce our inventory carrying costs. We will continue to pursue additional procurement cost savings which would further enhance our margins and cash flow. COMPETITION We have and will continue to experience robust competition for homebuilder…
• FY2025 10-K: …some of the same factors, including demographic trends, interest rates, consumer confidence, employment rates, the health of the economy and home financing markets. As a result of these pressures, we may experience reduced sales demand, challenges in the supply chain, increased margin pressures and/or increased…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Installed Building Products Q1 2026 earnings release, 2026