Kingspan, the Cavan-based insulation and building materials giant, is taking the long view on the US roofing market, sacrificing margin today for market share tomorrow.
So says Bank of America (BofA) analyst Allison Sun, following a meeting with Kingspan chief financial officer Geoff Doherty, which outlined the company’s aim to grow its share of the US market.
Kingspan is deliberately keeping US roofing profit margins lower than rivals, targeting 15 per cent rather than the high 20s. At that level it can still deliver a strong return on capital, while pricing aggressively enough to tempt customers away from competitors.
A key lure is a single system warranty covering both wall and roof, pitched as a lower-cost, lower-hassle option for distributors and builders. The strategy means near-term profitability takes a back seat to long-term penetration in a fragmented, margin-rich market.
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If industry margins hold up, there’s upside. If not, Kingspan will at least have bought market share. BofA has a €97 price target for Kingspan, which currently trades at about €70.
That €97 target rests on a price-earnings ratio of about 26, justified as consistent with the average over the past five years. However, Kingspan trades on 17.4 times 2025 estimates, far below that lofty mark.
Clearly, BofA likes the sound of Kingspan’s US push, but the climb from today’s valuation to its target leaves little margin for missteps.
