M/I Homes (NYSE: MHO) and NVR (NYSE:NVR) are both residential builders – single homes companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, dividends, earnings and profitability.

Institutional and Insider Ownership

80.6% of NVR shares are held by institutional investors. 4.7% of M/I Homes shares are held by insiders. Comparatively, 11.3% of NVR shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
M/I Homes $1.69 billion 0.54 $56.60 million $2.41 13.82
NVR $5.71 billion 2.10 $425.26 million $136.13 23.59

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

Profitability

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

Net Margins Return on Equity Return on Assets
M/I Homes 4.00% 12.31% 4.89%
NVR 9.22% 38.23% 19.86%

Risk & Volatility

M/I Homes has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500. Comparatively, NVR has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for M/I Homes and NVR, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
M/I Homes 0 1 2 0 2.67
NVR 0 3 2 0 2.40

M/I Homes currently has a consensus price target of $35.00, suggesting a potential upside of 5.11%. NVR has a consensus price target of $2,645.00, suggesting a potential downside of 17.62%. Given M/I Homes’ stronger consensus rating and higher possible upside, analysts plainly believe M/I Homes is more favorable than NVR.

Summary

NVR beats M/I Homes on 10 of the 13 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)).

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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