Financial Analysis: D.R. Horton (DHI) versus LGI Homes (NASDAQ:LGIH)
LGI Homes (NASDAQ: LGIH) and D.R. Horton (NYSE:DHI) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, profitabiliy, risk, valuation and earnings.
Valuation & Earnings
This table compares LGI Homes and D.R. Horton’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|LGI Homes||$838.77 million||1.22||$111.56 million||$3.35||14.16|
|D.R. Horton||$13.67 billion||1.00||$1.64 billion||$2.66||13.76|
D.R. Horton has higher revenue and earnings than LGI Homes. D.R. Horton is trading at a lower price-to-earnings ratio than LGI Homes, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
LGI Homes has a beta of 0.07, suggesting that its stock price is 93% less volatile than the S&P 500. Comparatively, D.R. Horton has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500.
Institutional & Insider Ownership
87.2% of LGI Homes shares are owned by institutional investors. Comparatively, 82.7% of D.R. Horton shares are owned by institutional investors. 13.6% of LGI Homes shares are owned by insiders. Comparatively, 7.2% of D.R. Horton shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
This table compares LGI Homes and D.R. Horton’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of recent recommendations and price targets for LGI Homes and D.R. Horton, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
LGI Homes currently has a consensus target price of $34.00, indicating a potential downside of 28.33%. D.R. Horton has a consensus target price of $36.70, indicating a potential upside of 0.30%. Given D.R. Horton’s stronger consensus rating and higher probable upside, analysts clearly believe D.R. Horton is more favorable than LGI Homes.
D.R. Horton pays an annual dividend of $0.40 per share and has a dividend yield of 1.1%. LGI Homes does not pay a dividend. D.R. Horton pays out 15.0% of its earnings in the form of a dividend. D.R. Horton has increased its dividend for 5 consecutive years.
LGI Homes beats D.R. Horton on 9 of the 17 factors compared between the two stocks.
LGI Homes Company Profile
LGI Homes, Inc. is a homebuilder and land developer. The Company is engaged in the design, construction, marketing and sale of new homes in markets in Texas, Arizona, Florida, Georgia, New Mexico, South Carolina, North Carolina, Colorado, Washington and Tennessee. The Company operates through five segments: the Texas division, the Southwest division, the Southeast division, the Florida division and the Northwest division. The Texas division includes homebuilding operations in Houston, Dallas/Fort Worth, San Antonio and Austin locations. The Southwest division includes homebuilding operations in Phoenix, Tucson, Albuquerque, Denver and Colorado Springs locations. The Southeast division includes homebuilding operations in Atlanta, Charlotte and Nashville locations. The Florida division includes homebuilding operations in Tampa, Orlando, Fort Myers and Jacksonville locations. The Northwest division includes homebuilding operations in Seattle location.
D.R. Horton Company Profile
D.R. Horton, Inc. is a homebuilding company. The Company constructed and sold homes in 27 states and 79 markets, as of September 30, 2015. The Company’s segments include its 39 homebuilding divisions, its financial services operations and its other business activities. In the homebuilding segment, the Company builds and sells single-family detached homes and attached homes, such as town homes, duplexes, triplexes and condominiums. The Company’s 39 homebuilding divisions are aggregated into six segments: East Region, South Central Region, Midwest Region, West Region, Southwest Region and Southeast Region. In the financial services segment, the Company sells mortgages and collects fees for title insurance agency and closing services. The Company has subsidiaries that conduct insurance-related operations; construct and own income-producing rental properties; own non-residential real estate, including ranch land and improvements, and own and operate oil and gas-related assets.
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