PICO Holdings (NASDAQ: PICO) and Taylor Morrison Home Corporation (NYSE:TMHC) are both cyclical consumer goods & services companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, valuation and profitability.

Profitability

This table compares PICO Holdings and Taylor Morrison Home Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PICO Holdings -4.85% -0.37% -0.26%
Taylor Morrison Home Corporation 2.41% 4.18% 2.21%

Institutional and Insider Ownership

69.5% of PICO Holdings shares are held by institutional investors. Comparatively, 59.3% of Taylor Morrison Home Corporation shares are held by institutional investors. 4.7% of PICO Holdings shares are held by insiders. Comparatively, 2.4% of Taylor Morrison Home Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and target prices for PICO Holdings and Taylor Morrison Home Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PICO Holdings 0 0 0 0 N/A
Taylor Morrison Home Corporation 0 4 1 0 2.20

Taylor Morrison Home Corporation has a consensus price target of $23.25, indicating a potential downside of 1.69%. Given Taylor Morrison Home Corporation’s higher probable upside, analysts clearly believe Taylor Morrison Home Corporation is more favorable than PICO Holdings.

Earnings and Valuation

This table compares PICO Holdings and Taylor Morrison Home Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
PICO Holdings $362.58 million 1.15 -$21.86 million ($0.07) -256.43
Taylor Morrison Home Corporation $3.55 billion 0.80 $52.61 million $0.62 38.15

Taylor Morrison Home Corporation has higher revenue and earnings than PICO Holdings. PICO Holdings is trading at a lower price-to-earnings ratio than Taylor Morrison Home Corporation, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

PICO Holdings has a beta of 1.28, suggesting that its share price is 28% more volatile than the S&P 500. Comparatively, Taylor Morrison Home Corporation has a beta of 1.48, suggesting that its share price is 48% more volatile than the S&P 500.

Summary

Taylor Morrison Home Corporation beats PICO Holdings on 9 of the 12 factors compared between the two stocks.

About PICO Holdings

PICO Holdings, Inc. (PICO) is a holding company. The Company’s segments include Water Resource and Water Storage Operations; Real Estate Operations, and Corporate. Its subsidiary, Vidler Water Company, Inc. (Vidler), owns water resources and water storage operations in the southwestern United States, with assets and operations in Nevada, Arizona, Colorado and New Mexico. The Real Estate Operations are conducted through UCP, Inc. (UCP), which is a homebuilder and land developer in markets located in California, Washington State, North Carolina, South Carolina and Tennessee. The Corporate segment includes its investments in small businesses, typically venture capital-type situations. As of December 31, 2016, the Company owned a membership interest in, and was the managing partner of, Fish Springs Ranch, LLC (FSR), which owned the Fish Springs Ranch and other properties totaling approximately 7,313 acres in Honey Lake Valley in Washoe County, approximately 40 miles north of Reno, Nevada.

About Taylor Morrison Home Corporation

Taylor Morrison Home Corporation is a homebuilder, which designs, builds and sells single-family detached and attached homes. The Company is also a land developer, with a portfolio of lifestyle and master-planned communities. Its segments include East, which includes Atlanta, Charlotte, North Florida, Raleigh, Southwest Florida and Tampa; Central, which includes Austin, Dallas, and Houston (each of the Dallas and Houston markets include both a Taylor Morrison division and a Darling Homes division); West, which includes Bay Area, Chicago, Denver, Phoenix, Sacramento and Southern California, and Mortgage Operations, which includes Taylor Morrison Home Funding, LLC (TMHF) and Inspired Title Services, LLC (Inspired Title). It operates under the Taylor Morrison and Darling Homes brand names. The Company also provides financial services to customers through its mortgage subsidiary, TMHF, and title insurance and closing settlement services through its title company, Inspired Title.

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