LGI Homes (NASDAQ: LGIH) and Green Brick Partners (NASDAQ:GRBK) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, earnings, valuation, risk, profitability, institutional ownership and analyst recommendations.

Insider & Institutional Ownership

88.2% of LGI Homes shares are owned by institutional investors. Comparatively, 82.6% of Green Brick Partners shares are owned by institutional investors. 13.6% of LGI Homes shares are owned by insiders. Comparatively, 53.1% of Green Brick Partners shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares LGI Homes and Green Brick Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LGI Homes 9.22% 23.65% 10.25%
Green Brick Partners 6.69% 11.30% 8.33%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for LGI Homes and Green Brick Partners, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LGI Homes 0 4 1 0 2.20
Green Brick Partners 0 0 0 0 N/A

LGI Homes presently has a consensus price target of $43.00, suggesting a potential downside of 7.63%. Given LGI Homes’ higher probable upside, research analysts plainly believe LGI Homes is more favorable than Green Brick Partners.

Earnings and Valuation

This table compares LGI Homes and Green Brick Partners’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
LGI Homes $940.22 million 1.07 $129.13 million $3.78 12.31
Green Brick Partners $415.72 million 1.17 $55.33 million $0.58 17.07

LGI Homes has higher revenue and earnings than Green Brick Partners. LGI Homes is trading at a lower price-to-earnings ratio than Green Brick Partners, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

LGI Homes has a beta of 0.07, indicating that its share price is 93% less volatile than the S&P 500. Comparatively, Green Brick Partners has a beta of 1.84, indicating that its share price is 84% more volatile than the S&P 500.

Summary

LGI Homes beats Green Brick Partners on 10 of the 13 factors compared between the two stocks.

About LGI Homes

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.

About Green Brick Partners

Green Brick Partners, Inc. operates in the real estate industry. The Company operates through two segments. The builder operations segment includes its controlled builders results, which include building and selling single-family detached homes and townhomes that are designed and built to meet local customer preferences, and the sale of lots. Builder operations consist of three operating segments: Texas, Georgia, and corporate and other. Corporate operations segment develops and implements strategic initiatives and supports its builder operations and land development by centralizing certain administrative functions, such as finance, treasury, information technology and human resources. The land development segment includes operations related to the acquisition and development of land, which is sold to its controlled builders and third-party homebuilders. As of December 31, 2016, it had owned or controlled over 5,200 home sites in various locations in the Dallas and Atlanta markets.

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