KB Home (KBH) & PulteGroup (PHM) Head to Head Review
KB Home (NYSE: KBH) and PulteGroup (NYSE:PHM) are both construction companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitability, risk, analyst recommendations, valuation, institutional ownership and dividends.
KB Home pays an annual dividend of $0.10 per share and has a dividend yield of 0.5%. PulteGroup pays an annual dividend of $0.36 per share and has a dividend yield of 1.4%. KB Home pays out 7.7% of its earnings in the form of a dividend. PulteGroup pays out 20.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. KB Home has increased its dividend for 3 consecutive years.
This table compares KB Home and PulteGroup’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a summary of current ratings for KB Home and PulteGroup, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
KB Home presently has a consensus price target of $20.14, indicating a potential downside of 9.31%. PulteGroup has a consensus price target of $24.91, indicating a potential downside of 1.47%. Given PulteGroup’s stronger consensus rating and higher possible upside, analysts clearly believe PulteGroup is more favorable than KB Home.
Institutional & Insider Ownership
99.2% of KB Home shares are held by institutional investors. Comparatively, 88.1% of PulteGroup shares are held by institutional investors. 8.6% of KB Home shares are held by company insiders. Comparatively, 0.7% of PulteGroup shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares KB Home and PulteGroup’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|KB Home||$3.93 billion||0.48||$243.37 million||$1.30||17.08|
|PulteGroup||$8.09 billion||0.94||$1.11 billion||$1.80||14.04|
PulteGroup has higher revenue and earnings than KB Home. PulteGroup is trading at a lower price-to-earnings ratio than KB Home, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
KB Home has a beta of 1.62, meaning that its share price is 62% more volatile than the S&P 500. Comparatively, PulteGroup has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500.
PulteGroup beats KB Home on 11 of the 17 factors compared between the two stocks.
About KB Home
KB HOME is a homebuilding company. The Company is engaged in selling and building a range of new homes designed primarily for first-time, move-up and active adult homebuyers, including attached and detached single-family residential homes. It operates through five segments, which consist of four homebuilding segments and one financial services segment. Its homebuilding segments include West Coast, Southwest, Central and Southeast. The homebuilding segments are engaged in the acquisition and development of land primarily for residential purposes. The financial services segment offers property and casualty insurance and, in certain instances, earthquake, flood and personal property insurance to its homebuyers in the same markets as its homebuilding segments, and provides title services in the majority of markets located within its Central and Southeast homebuilding segments. It offers homes in development communities, at urban in-fill locations and as part of mixed-use projects.
PulteGroup, Inc. is a homebuilder in the United States. The Company’s segments include Homebuilding and Financial Services. Its Homebuilding operations are engaged in the acquisition and development of land primarily for residential purposes within the United States and the construction of housing on such land. Its Financial Services operations consist principally of mortgage banking and title operations. The Company conducts its financial services business, through Pulte Mortgage LLC (Pulte Mortgage) and other subsidiaries. Pulte Mortgage arranges financing through the origination of mortgage loans. The Company’s subsidiaries are engaged in the homebuilding business. It offers a product line to meet the needs of homebuyers in its focused markets. Through its brands, which include Centex, Pulte Homes, Del Webb, DiVosta Homes, and John Wieland Homes and Neighborhoods, the Company offers a range of home designs, including single-family detached, townhouses, condominiums and duplexes.
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