M/I Homes (NYSE: MHO) and Lennar Corporation (NYSE:LEN) are both construction companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, dividends, risk, institutional ownership, profitabiliy, analyst recommendations and valuation.

Profitability

This table compares M/I Homes and Lennar Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
M/I Homes 3.57% 12.99% 5.11%
Lennar Corporation 6.78% 12.57% 5.69%

Analyst Ratings

This is a summary of recent recommendations and price targets for M/I Homes and Lennar Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
M/I Homes 0 1 2 0 2.67
Lennar Corporation 0 8 9 1 2.61

M/I Homes presently has a consensus target price of $32.00, suggesting a potential upside of 23.98%. Lennar Corporation has a consensus target price of $56.31, suggesting a potential upside of 3.80%. Given M/I Homes’ stronger consensus rating and higher possible upside, equities research analysts plainly believe M/I Homes is more favorable than Lennar Corporation.

Valuation & Earnings

This table compares M/I Homes and Lennar Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
M/I Homes $1.83 billion 0.35 $132.36 million $2.12 12.17
Lennar Corporation $11.81 billion 0.93 $1.36 billion $3.42 15.86

Lennar Corporation has higher revenue and earnings than M/I Homes. M/I Homes is trading at a lower price-to-earnings ratio than Lennar Corporation, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

82.1% of Lennar Corporation shares are held by institutional investors. 4.7% of M/I Homes shares are held by insiders. Comparatively, 12.2% of Lennar Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

M/I Homes has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500. Comparatively, Lennar Corporation has a beta of 1.26, suggesting that its share price is 26% more volatile than the S&P 500.

Dividends

Lennar Corporation pays an annual dividend of $0.16 per share and has a dividend yield of 0.3%. M/I Homes does not pay a dividend. Lennar Corporation pays out 4.7% of its earnings in the form of a dividend.

Summary

Lennar Corporation beats M/I Homes on 13 of the 17 factors compared between the two stocks.

M/I Homes Company Profile

M/I Homes, Inc. is a builder of single-family homes. The Company consists of two operations: homebuilding and financial services. It operates through Midwest homebuilding, Southern homebuilding, Mid-Atlantic homebuilding and financial services operations segments. The Company and its subsidiaries are engaged primarily in the construction and sale of single-family residential homes in 15 markets: Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Chicago, Illinois; Minneapolis/St. Paul, Minnesota; Tampa, Orlando and Sarasota, Florida; Austin, Dallas/Fort Worth, Houston and San Antonio, Texas; Charlotte and Raleigh, North Carolina; and the Virginia and Maryland suburbs of Washington, D.C. The Company’s financial services operations support its homebuilding operations by providing mortgage loans and title services to the customers of its homebuilding operations. It markets and sells homes primarily under the M/I Homes brand (M/I Homes and Showcase Collection (by M/I)).

Lennar Corporation Company Profile

Lennar Corporation is a provider of real estate related financial services, commercial real estate, investment management and finance company. The Company is a homebuilder that operates in various states. Its segments include Homebuilding East, Homebuilding Central, Homebuilding West, Lennar Financial Services, Rialto and Lennar Multifamily. It is a developer of multifamily rental properties. Its Homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development and sale of residential land. It operates primarily under the Lennar brand name. The Lennar Financial Services segment includes mortgage financing, title insurance and closing services for both buyers of its homes and others. The Rialto segment is a real estate, investment management, and finance company. The Lennar Multifamily segment focuses on developing a portfolio of institutional multifamily rental properties in the United States markets.

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