LGI Homes (NASDAQ: LGIH) and Beazer Homes USA (NYSE:BZH) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, dividends and valuation.

Institutional and Insider Ownership

92.0% of LGI Homes shares are held by institutional investors. Comparatively, 83.5% of Beazer Homes USA shares are held by institutional investors. 13.6% of LGI Homes shares are held by company insiders. Comparatively, 7.6% of Beazer Homes USA shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares LGI Homes and Beazer Homes USA’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LGI Homes 9.26% 25.51% 11.10%
Beazer Homes USA 1.66% 6.29% 1.86%

Volatility & Risk

LGI Homes has a beta of 0.27, meaning that its stock price is 73% less volatile than the S&P 500. Comparatively, Beazer Homes USA has a beta of 2.69, meaning that its stock price is 169% more volatile than the S&P 500.

Valuation and Earnings

This table compares LGI Homes and Beazer Homes USA’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
LGI Homes $838.32 million 1.74 $75.03 million $4.32 15.54
Beazer Homes USA $1.92 billion 0.35 $31.81 million $0.98 20.36

LGI Homes has higher earnings, but lower revenue than Beazer Homes USA. LGI Homes is trading at a lower price-to-earnings ratio than Beazer Homes USA, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for LGI Homes and Beazer Homes USA, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LGI Homes 0 4 2 0 2.33
Beazer Homes USA 1 3 1 0 2.00

LGI Homes currently has a consensus price target of $53.00, suggesting a potential downside of 21.07%. Beazer Homes USA has a consensus price target of $19.00, suggesting a potential downside of 4.76%. Given Beazer Homes USA’s higher possible upside, analysts plainly believe Beazer Homes USA is more favorable than LGI Homes.

Summary

LGI Homes beats Beazer Homes USA on 10 of the 14 factors compared between the two stocks.

LGI Homes Company Profile

LGI Homes, Inc. is a homebuilder and land developer. The Company is engaged in the design, construction, marketing and sale of new homes in markets in Texas, Arizona, Florida, Georgia, New Mexico, South Carolina, North Carolina, Colorado, Washington and Tennessee. The Company operates through five segments: the Texas division, the Southwest division, the Southeast division, the Florida division and the Northwest division. The Texas division includes homebuilding operations in Houston, Dallas/Fort Worth, San Antonio and Austin locations. The Southwest division includes homebuilding operations in Phoenix, Tucson, Albuquerque, Denver and Colorado Springs locations. The Southeast division includes homebuilding operations in Atlanta, Charlotte and Nashville locations. The Florida division includes homebuilding operations in Tampa, Orlando, Fort Myers and Jacksonville locations. The Northwest division includes homebuilding operations in Seattle location.

Beazer Homes USA Company Profile

Beazer Homes USA, Inc. is a geographically diversified homebuilder. As of September 30, 2016, the Company had operations in 13 states within over three geographic regions in the United States. The Company’s segments include West, East and Southeast. The Company markets and sells its products through its Website, www.beazer.com; mobile site, m.beazer.com; real estate listing sites, online advertising, including search engine marketing and display advertising, social media, video, brochures, direct marketing and out-of-home advertising, including billboards and signage, as well as other activities. It offers lender choice and personalization. The Company’s Choice Plans allows buyers to choose living areas, such as the kitchen and master bathroom. Its West segment includes Arizona, California, Nevada and Texas. Its East segment includes Indiana, Maryland/Delaware, Tennessee and Virginia. Its Southeast segment includes Florida, Georgia, North Carolina and South Carolina.

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