M.D.C. Holdings (NYSE: MDC) and NVR (NYSE:NVR) are both construction companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, analyst recommendations, profitability, institutional ownership and valuation.

Valuation & Earnings

This table compares M.D.C. Holdings and NVR’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
M.D.C. Holdings $2.58 billion 0.62 $199.46 million $2.36 13.12
NVR $6.12 billion 1.65 $800.07 million $126.57 21.29

NVR has higher revenue and earnings than M.D.C. Holdings. M.D.C. Holdings is trading at a lower price-to-earnings ratio than NVR, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and target prices for M.D.C. Holdings and NVR, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
M.D.C. Holdings 3 4 0 0 1.57
NVR 0 4 1 0 2.20

M.D.C. Holdings presently has a consensus target price of $29.00, indicating a potential downside of 6.54%. NVR has a consensus target price of $2,645.00, indicating a potential downside of 1.82%. Given NVR’s stronger consensus rating and higher possible upside, analysts clearly believe NVR is more favorable than M.D.C. Holdings.

Volatility & Risk

M.D.C. Holdings has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500. Comparatively, NVR has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500.

Profitability

This table compares M.D.C. Holdings and NVR’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
M.D.C. Holdings 4.76% 9.25% 4.89%
NVR 9.55% 40.29% 20.96%

Institutional and Insider Ownership

81.5% of M.D.C. Holdings shares are held by institutional investors. Comparatively, 77.3% of NVR shares are held by institutional investors. 25.3% of M.D.C. Holdings shares are held by insiders. Comparatively, 11.3% of NVR shares are held by 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.

Summary

NVR beats M.D.C. Holdings on 11 of the 14 factors compared between the two stocks.

M.D.C. Holdings Company Profile

M.D.C. Holdings, Inc. is engaged in two primary operations, including homebuilding and financial services. The Company’s segments include West, including segments located in Arizona, California, Nevada and Washington; Mountain, including segments located in Colorado and Utah; East, including segments located in Virginia, Florida and Maryland, which includes Pennsylvania and New Jersey; mortgage operations, including HomeAmerican Mortgage Corporation, and Other, which includes Allegiant Insurance Company, Inc., StarAmerican Insurance Ltd., American Home Insurance Agency, Inc. and American Home Title and Escrow Company. The homebuilding operations consist of subsidiary companies that purchases finished lots or develop lots necessary for the construction and sale of single-family detached homes to first-time and first-time move-up homebuyers under the name Richmond American Homes. It also includes land acquisition and development, home construction, and sales and marketing.

NVR Company Profile

NVR, Inc. is engaged in the construction and sale of single-family detached homes, townhomes and condominium buildings. The Company’s segments are Homebuilding Mid Atlantic, Homebuilding North East, Homebuilding Mid East, Homebuilding South East and Mortgage Banking. Its Homebuilding Mid Atlantic segment operates in various geographic regions, which include Maryland, Virginia, West Virginia, Delaware and Washington, District of Columbia (D.C.). Its Homebuilding North East segment operates in various geographic regions, which include New Jersey and Eastern Pennsylvania. Its Homebuilding Mid East segment operates in various geographic regions, which include New York, Ohio, Indiana and Illinois, The Homebuilding South East segment operates in various geographic regions, which include North Carolina, South Carolina, Florida and Tennessee. The Mortgage Banking segment provides mortgage-related services to home building customers through its mortgage banking operations.

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