Stratus Properties (NASDAQ:STRS) and Smith Douglas Homes (NYSE:SDHC) Critical Review

Smith Douglas Homes (NYSE:SDHC) and Stratus Properties (NASDAQ:STRS) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, institutional ownership, risk and dividends.

Valuation and Earnings

This table compares Smith Douglas Homes and Stratus Properties”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Smith Douglas Homes	$975.46 million	1.16	$16.07 million	$1.25	17.63
Stratus Properties	$54.18 million	3.47	$1.96 million	($1.01)	-23.33

Smith Douglas Homes has higher revenue and earnings than Stratus Properties. Stratus Properties is trading at a lower price-to-earnings ratio than Smith Douglas Homes, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Smith Douglas Homes and Stratus Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Smith Douglas Homes	1.13%	0.12%	0.10%
Stratus Properties	-25.38%	-2.57%	-1.46%

Analyst Recommendations

This is a summary of current recommendations for Smith Douglas Homes and Stratus Properties, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Smith Douglas Homes	3	5	1	0	1.78
Stratus Properties	1	0	0	0	1.00

Smith Douglas Homes currently has a consensus price target of $16.60, indicating a potential downside of 24.66%. Given Smith Douglas Homes’ stronger consensus rating and higher possible upside, research analysts clearly believe Smith Douglas Homes is more favorable than Stratus Properties.

Risk and Volatility

Smith Douglas Homes has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500. Comparatively, Stratus Properties has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500.

Institutional & Insider Ownership

61.6% of Stratus Properties shares are held by institutional investors. 10.0% of Stratus Properties shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Smith Douglas Homes beats Stratus Properties on 10 of the 14 factors compared between the two stocks.

About Smith Douglas Homes

Smith Douglas Homes Corp., together with its subsidiaries, engages in the design, construction, and sale of single-family homes in the southeastern United States. It also provides closing, escrow, and title insurance services. The company sells its products to entry-level and empty-nest homebuyers. Smith Douglas Homes Corp. was founded in 2008 and is headquartered in Woodstock, Georgia.

About Stratus Properties

Stratus Properties Inc., a real estate company, engages in the entitlement, development, management, leasing, and sale of multi and single family residential and commercial real estate properties in the Austin, Texas area and other select markets in Texas. The company operates in two segments, Real Estate Operations and Leasing Operations. Its leasing operations cover lease of space at retail and mixed-use and multi-family properties. The company was incorporated in 1992 and is headquartered in Austin, Texas.