Morningstar Rating

Stock Research and Analysis

by Keith Schoonmaker, CFA

Bulls Say

USG should have strong cyclical tailwinds given its heavy exposure to U.S. residential starts and nonresidential construction spending, which each remain approximately one third below midcycle levels.
USG’s UltraLight technology should allow the company to enjoy some premium pricing and possibly take market share on wallboard and related gypsum products.
Wallboard industry consolidation should lead to a more rational wallboard pricing environment, leading to improved margins and ROICs this cycle versus the last. Read more 

Bears Say

USG’s building products are largely commodified, making economic profit generation difficult over a full market cycle.
L&W, USG’s building products distribution business and 30% of revenue, is likely to be an ongoing drag on profitability absent a strong commercial construction recovery.
Cyclicality is paramount in this industry with wild swings not only in industry volume but also pricing, with peak-to-trough revenue down 50% last cycle. This can be a very difficult business to manage through a cycle. Read more 


USG has been led since 2011 by company veteran James Metcalf. He replaced retiring CEO William Foote, who led USG for more than a decade and guided the company through some of the most difficult periods in its history (including its self-declared bankruptcy   Read more 


USG is a manufacturer and distributor of building materials, most notably drywall and joint compound, for use in new residential, new nonresidential, and residential and   Read more 

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