Head to Head Review: Legacy Housing (NASDAQ:LEGH) and Smith Douglas Homes (NYSE:SDHC)

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

Profitability

This table compares Smith Douglas Homes and Legacy Housing’s 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%
Legacy Housing	26.66%	9.47%	8.80%

Valuation and Earnings

This table compares Smith Douglas Homes and Legacy Housing”s 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	0.86	$16.07 million	$1.25	13.09
Legacy Housing	$184.19 million	2.82	$61.64 million	$1.95	11.15

Legacy Housing has lower revenue, but higher earnings than Smith Douglas Homes. Legacy Housing 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.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Smith Douglas Homes and Legacy Housing, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Smith Douglas Homes	3	5	1	0	1.78
Legacy Housing	0	4	0	0	2.00

Smith Douglas Homes currently has a consensus price target of $16.60, suggesting a potential upside of 1.44%. Legacy Housing has a consensus price target of $21.00, suggesting a potential downside of 3.40%. Given Smith Douglas Homes’ higher probable upside, research analysts clearly believe Smith Douglas Homes is more favorable than Legacy Housing.

Institutional & Insider Ownership

89.4% of Legacy Housing shares are held by institutional investors. 30.1% of Legacy Housing shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility & Risk

Smith Douglas Homes has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500. Comparatively, Legacy Housing has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500.

Summary

Legacy Housing beats Smith Douglas Homes on 9 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 Legacy Housing

Legacy Housing Corporation engages in the building, sale, and financing of manufactured homes and tiny houses primarily in the southern United States. It manufactures and provides for the transport of mobile homes, including 1 to 5 bedrooms with 1 to 3 1/2 bathrooms; and provides wholesale financing to dealers and mobile home parks, as well as retail financing to consumers. The company also offers inventory financing for its independent retailers; consumer financing for its products; and financing to manufactured housing community owners that buy or lease its products for use in their rental housing communities. In addition, it involved in financing and developing new manufactured home communities. The company markets its homes under the Legacy brand through a network of independent retailers and company-owned stores; and directly to manufactured home communities. Legacy Housing Corporation was founded in 2005 and is headquartered in Bedford, Texas.