William Lyon Homes (NYSE: WLH) and Meritage (NYSE:MTH) are both construction companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, valuation, earnings, profitability and risk.
Insider and Institutional Ownership
98.1% of William Lyon Homes shares are owned by institutional investors. Comparatively, 98.2% of Meritage shares are owned by institutional investors. 21.3% of William Lyon Homes shares are owned by insiders. Comparatively, 5.6% of Meritage shares are owned 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.
This is a summary of recent ratings and recommmendations for William Lyon Homes and Meritage, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|William Lyon Homes||0||2||2||0||2.50|
William Lyon Homes currently has a consensus price target of $27.25, indicating a potential downside of 3.16%. Meritage has a consensus price target of $41.63, indicating a potential downside of 15.40%. Given William Lyon Homes’ stronger consensus rating and higher possible upside, analysts plainly believe William Lyon Homes is more favorable than Meritage.
Volatility and Risk
William Lyon Homes has a beta of 1.81, indicating that its share price is 81% more volatile than the S&P 500. Comparatively, Meritage has a beta of 1.53, indicating that its share price is 53% more volatile than the S&P 500.
This table compares William Lyon Homes and Meritage’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|William Lyon Homes||3.61%||9.33%||3.58%|
Valuation & Earnings
This table compares William Lyon Homes and Meritage’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|William Lyon Homes||$1.41 billion||0.64||$59.69 million||$1.53||18.39|
|Meritage||$3.03 billion||0.66||$149.54 million||$3.78||13.02|
Meritage has higher revenue and earnings than William Lyon Homes. Meritage is trading at a lower price-to-earnings ratio than William Lyon Homes, indicating that it is currently the more affordable of the two stocks.
Meritage beats William Lyon Homes on 8 of the 14 factors compared between the two stocks.
William Lyon Homes Company Profile
William Lyon Homes is primarily engaged in the design, construction and sale of single family detached and attached homes in California, Arizona and Nevada. The Company conducts its homebuilding operations through four reportable operating segments: Southern California, Northern California, Arizona and Nevada. For the three months ended March 31, 2012, 37% of home closings were derived from the Company’s California operations. The Company designs, constructs and sells a range of homes designed to meet the needs of each of its markets, although it primarily focuses sales to the entry-level and first time move-up home buyer markets. During the year ended December 31, 2011, the Company marketed its homes through 19 sales locations. In October 2013, the Company purchase 221 homesites at the master-planned Southshore community in Aurora, Colorado.
Meritage Company Profile
Meritage Homes Corporation operates as a holding company. The Company is a designer and builder of single-family homes. The Company operates through two segments: homebuilding and financial services. The homebuilding segment is engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes, and providing warranty and customer services. It builds homes in the regions of the United States and offers a range of homes that are designed for a range of homebuyers, including first-time, move-up, active adult and luxury. As of December 31, 2016, it had homebuilding operations in three regions: West, Central and East, which were consisted of nine states: Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina and Tennessee. It also operates Carefree Title Agency, Inc. (Carefree Title) company. Carefree Title’s core business includes title insurance and closing/settlement services it offers to its homebuyers.
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