D.R. Horton (DHI) and KB Home (KBH) Financial Contrast
D.R. Horton (NYSE: DHI) and KB Home (NYSE:KBH) are both mid-cap construction companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, risk, dividends, valuation, earnings, institutional ownership and profitability.
Volatility & Risk
D.R. Horton has a beta of 1.24, indicating that its share price is 24% more volatile than the S&P 500. Comparatively, KB Home has a beta of 1.54, indicating that its share price is 54% more volatile than the S&P 500.
D.R. Horton pays an annual dividend of $0.40 per share and has a dividend yield of 1.0%. KB Home pays an annual dividend of $0.10 per share and has a dividend yield of 0.4%. D.R. Horton pays out 15.0% of its earnings in the form of a dividend. KB Home pays out 7.2% 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 5 consecutive years.
This table compares D.R. Horton and KB Home’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional & Insider Ownership
82.3% of D.R. Horton shares are owned by institutional investors. Comparatively, 98.4% of KB Home shares are owned by institutional investors. 7.2% of D.R. Horton shares are owned by company insiders. Comparatively, 8.6% of KB Home shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Valuation & Earnings
This table compares D.R. Horton and KB Home’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|D.R. Horton||$13.67 billion||1.12||$1.64 billion||$2.66||15.35|
|KB Home||$4.16 billion||0.51||$277.52 million||$1.39||17.73|
D.R. Horton has higher revenue and earnings than KB Home. D.R. Horton is trading at a lower price-to-earnings ratio than KB Home, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings for D.R. Horton and KB Home, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
D.R. Horton currently has a consensus price target of $36.97, indicating a potential downside of 9.48%. KB Home has a consensus price target of $21.50, indicating a potential downside of 12.78%. Given D.R. Horton’s stronger consensus rating and higher possible upside, analysts clearly believe D.R. Horton is more favorable than KB Home.
D.R. Horton beats KB Home on 11 of the 17 factors compared between the two stocks.
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.
KB Home Company Profile
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.
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