Has Installed Building Products’ Acquisition News Justified Its 46.6% Rally in 2025?

• Ever wonder if Installed Building Products is actually a bargain, or if its high share price just means you missed the boat? You are not alone, as many investors are taking a second look at where the stock stands today.
• Despite a strong rally this year, with shares up 46.6% year-to-date and a massive 246.0% gain over three years, the stock has recently pulled back by 5.0% over the last week after a steady 3.0% rise last month.
• Recent momentum follows news of acquisitions that expand IBP’s footprint in specialty distribution, plus management’s continued focus on strategic growth. This helps explain some of the buzz and price swings.
• When it comes to valuation checks, Installed Building Products currently scores 0 out of 6 on Simply Wall St’s assessment of undervaluation. It is worth digging deeper into the methods used to reach that score, especially since there just might be a smarter way to judge value that we will cover at the end of this article.

Installed Building Products scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Installed Building Products Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by forecasting its future cash flows and discounting them back to today’s dollars. For Installed Building Products, this involves projecting annual Free Cash Flow (FCF) forward and then using financial models to determine what those future dollars are worth today.

Currently, Installed Building Products generates Free Cash Flow of $287 million. Analysts have provided estimates up to 2027, with projected FCF reaching $295.7 million. Beyond these years, further cash flow values are extrapolated, with Simply Wall St forecasting FCF to increase gradually each year, resulting in an estimate of roughly $352.8 million by 2035. All cash flows referenced are in US dollars.

Based on these projections, the DCF model arrives at an intrinsic value of $183.03 per share. This implies that IBP’s stock is 38.8% above its fair value according to the DCF analysis. In summary, the shares appear overvalued at their current price.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Installed Building Products may be overvalued by 38.8%. Discover 837 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Installed Building Products.

Approach 2: Installed Building Products Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used metric for valuing profitable companies like Installed Building Products. This measure relates a company’s share price to its per-share earnings, giving investors a quick snapshot of how much they are paying for each dollar of earnings.

Growth expectations and overall business risk play a major role in determining what a “normal” or “fair” PE ratio should be for any company. Companies with higher anticipated earnings growth or lower risk often trade at higher PE multiples. Those facing uncertainty or limited growth typically command lower ratios.

Installed Building Products currently trades at a PE ratio of 27.6x, which is considerably above the industry average of 10.4x and also above its peer group average of 14.2x. This might suggest an overvalued stock at first glance.

However, Simply Wall St uses a proprietary “Fair Ratio” to estimate what PE multiple suits this company best, taking into account its specific earnings growth, industry standing, profit margins, market cap, and risks. This approach offers a more tailored benchmark compared to broad comparisons with peers or industry averages, as it adjusts for all the unique drivers affecting Installed Building Products.

According to this Fair Ratio analysis, a PE of 15.2x would be a suitable valuation for Installed Building Products. Since the current PE of 27.6x sits significantly above this Fair Ratio, the stock appears to be significantly overvalued based on this metric.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1410 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Installed Building Products Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your story behind the numbers; it is your perspective on where Installed Building Products is heading and why, captured by your own forecasts for key measures like fair value, revenue, earnings, and margins.

Narratives connect a company's business context, news, and strategic outlook to dynamic financial forecasts, giving you a fair value that’s personal and evidence-based. On Simply Wall St’s Community page, millions of investors use Narratives as an easy and accessible tool to track, update, or share their investment thesis for Installed Building Products and compare it with the current market price to make smarter buy or sell decisions.

What makes Narratives powerful is how quickly they update in response to new information. For example, a change in housing starts, margin expansion, or management guidance will flow through your Narrative and automatically update your estimated fair value, helping you react faster and more confidently.

Take Installed Building Products as an example. While some investors may hold a Narrative projecting robust backlog and resilient profitability (leading to a $290.0 price target), others may see prolonged margin pressure and slowing housing trends as reasons for a more cautious $184.0 target. Narratives help you quantify and act on your view, no matter which side you fall on.

Do you think there's more to the story for Installed Building Products? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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