PulteGroup (NYSE: PHM) and Brookfield Residential Properties (NYSE:BRP) are both construction companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, valuation, risk, profitabiliy, analyst recommendations and dividends.

Institutional & Insider Ownership

92.5% of PulteGroup shares are held by institutional investors. 0.7% of PulteGroup shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares PulteGroup and Brookfield Residential Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PulteGroup 7.35% 13.43% 6.22%
Brookfield Residential Properties 12.74% 18.70% 8.12%

Earnings and Valuation

This table compares PulteGroup and Brookfield Residential Properties’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
PulteGroup $8.09 billion 0.94 $1.11 billion $1.80 14.06
Brookfield Residential Properties N/A N/A N/A N/A N/A

PulteGroup has higher revenue and earnings than Brookfield Residential Properties.

Dividends

PulteGroup pays an annual dividend of $0.36 per share and has a dividend yield of 1.4%. Brookfield Residential Properties does not pay a dividend. PulteGroup pays out 20.0% of its earnings in the form of a dividend. Brookfield Residential Properties has raised its dividend for 3 consecutive years.

Analyst Ratings

This is a summary of current recommendations and price targets for PulteGroup and Brookfield Residential Properties, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PulteGroup 1 7 5 0 2.31
Brookfield Residential Properties 0 0 3 0 3.00

PulteGroup currently has a consensus target price of $24.91, suggesting a potential downside of 1.58%. Brookfield Residential Properties has a consensus target price of $29.00, suggesting a potential upside of 20.83%. Given Brookfield Residential Properties’ stronger consensus rating and higher probable upside, analysts clearly believe Brookfield Residential Properties is more favorable than PulteGroup.

Summary

Brookfield Residential Properties beats PulteGroup on 7 of the 12 factors compared between the two stocks.

About PulteGroup

PulteGroup, Inc. is a homebuilder in the United States. The Company’s segments include Homebuilding and Financial Services. Its Homebuilding operations are engaged in the acquisition and development of land primarily for residential purposes within the United States and the construction of housing on such land. Its Financial Services operations consist principally of mortgage banking and title operations. The Company conducts its financial services business, through Pulte Mortgage LLC (Pulte Mortgage) and other subsidiaries. Pulte Mortgage arranges financing through the origination of mortgage loans. The Company’s subsidiaries are engaged in the homebuilding business. It offers a product line to meet the needs of homebuyers in its focused markets. Through its brands, which include Centex, Pulte Homes, Del Webb, DiVosta Homes, and John Wieland Homes and Neighborhoods, the Company offers a range of home designs, including single-family detached, townhouses, condominiums and duplexes.

About Brookfield Residential Properties

Brookfield Residential Properties Inc. is a land developer and homebuilder with operations in Canada and the United States. The Company develops land to create master-planned communities and build and sell lots to third-party builders, as well as to its own homebuilding division. It also participates in real estate opportunities, including infill projects, mixed-use developments, infrastructure projects and joint ventures. It operates through three segments within North America: Canada, California and Central and Eastern United States. Its Canadian operations are in the Alberta and Ontario markets; California operations include Northern California (San Francisco Bay Area and Sacramento) and Southern California (Los Angeles/Southland and San Diego/Riverside), and Central and Eastern United States operations include Washington, D.C. Area, Colorado, Texas and Arizona. It is focused on land development and single family and multi-family homebuilding in the markets in which it operates.

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