• If you are wondering whether Installed Building Products is still fairly priced after a strong run, this article will walk through what the current share price might be telling you about value.
• The stock last closed at US$328.92, with returns of 14.2% over 7 days, 27.5% over 30 days, 23.0% year to date, 83.9% over 1 year, 221.3% over 3 years and 178.0% over 5 years, which has many investors rechecking what they are willing to pay.
• Recent coverage has focused on Installed Building Products as an established installer serving residential and commercial construction across insulation and other building products. This helps frame how the market might be thinking about its prospects and risks. This broader attention gives context to those recent price moves, as investors weigh the durability of its end markets against what is already reflected in the share price.
• On Simply Wall St’s 6 point valuation framework, Installed Building Products currently scores 0 out of 6. Next we will break down what different valuation methods say about that result and then finish by looking at an even better way to think about value using the full company narrative.

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

A Discounted Cash Flow model estimates what a company might be worth by projecting its future cash flows and then discounting those back to today using a required rate of return. It is essentially asking what all those future dollars are worth in present terms.

For Installed Building Products, the model uses a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $307.0 million. Analysts provide explicit forecasts only for the next few years, including an estimate of $309.7 million in 2026 and $306.7 million in 2027. Cash flow projections out to 2035 are then extrapolated by Simply Wall St rather than based on additional analyst estimates.

When all those projected cash flows are discounted back and combined with a terminal value, the model arrives at an estimated intrinsic value of about $194.84 per share. Compared with the recent share price of US$328.92, this DCF view suggests the stock is around 68.8% above the estimated intrinsic value.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Installed Building Products may be overvalued by 68.8%. Discover 53 high quality undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Installed Building Products Price vs Earnings

For profitable companies like Installed Building Products, the P/E ratio is a commonly used yardstick because it links what you pay for each share to the earnings that the business is currently generating. Investors usually accept a higher P/E when they expect stronger growth or see lower risk, and a lower P/E when growth expectations are modest or risks are higher.

Installed Building Products is trading on a P/E of 34.68x, compared with the Consumer Durables industry average of 13.57x and a peer group average of 16.76x. Simply Wall St also calculates a “Fair Ratio” of 16.02x, which is its view of what a more typical P/E could look like for this company.

The Fair Ratio is a proprietary metric that goes beyond simple peer or industry comparisons, as it is based on factors such as earnings growth, profit margins, the company’s industry, market cap and risk profile. Because it adjusts for these company specific drivers, it can be a more tailored yardstick than looking at raw averages alone. On this basis, the current 34.68x P/E is well above the 16.02x Fair Ratio, which points to the shares looking expensive on earnings.

Result: OVERVALUED

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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 us introduce you to Narratives. Narratives let you link your view of the Installed Building Products story to your own forecasts for revenue, earnings and margins, and then to a fair value that you can compare with today’s share price. On Simply Wall St, Narratives are easy to use and sit within the Community page, where millions of investors build and share their views on companies like Installed Building Products in a structured way rather than just debating the P/E.

Each Narrative connects three pieces: your story about the business, a forecast that reflects that story, and a fair value estimate that tells you whether the current price looks high or low against your assumptions, which can help you decide when you might want to buy or sell. Narratives also update as new information such as earnings releases or news is incorporated, so your view is not frozen at one point in time. For example, one Installed Building Products Narrative might assume a relatively conservative fair value, while another assumes a much higher fair value based on a different outlook for its end markets.

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.