Lennar Corporation (NYSE: LEN) and M.D.C. Holdings (NYSE:MDC) are both construction companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, profitability and institutional ownership.

Profitability

This table compares Lennar Corporation and M.D.C. Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lennar Corporation 6.78% 12.57% 5.69%
M.D.C. Holdings 4.76% 9.25% 4.89%

Earnings & Valuation

This table compares Lennar Corporation and M.D.C. Holdings’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Lennar Corporation $11.81 billion 0.89 $1.36 billion $3.42 15.09
M.D.C. Holdings $2.58 billion 0.62 $199.46 million $2.36 13.12

Lennar Corporation has higher revenue and earnings than M.D.C. Holdings. M.D.C. Holdings is trading at a lower price-to-earnings ratio than Lennar Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings for Lennar Corporation and M.D.C. Holdings, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lennar Corporation 0 8 9 1 2.61
M.D.C. Holdings 3 4 0 0 1.57

Lennar Corporation currently has a consensus price target of $56.31, indicating a potential upside of 9.11%. M.D.C. Holdings has a consensus price target of $29.00, indicating a potential downside of 6.54%. Given Lennar Corporation’s stronger consensus rating and higher possible upside, research analysts clearly believe Lennar Corporation is more favorable than M.D.C. Holdings.

Risk & Volatility

Lennar Corporation has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500. Comparatively, M.D.C. Holdings has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500.

Dividends

Lennar Corporation pays an annual dividend of $0.16 per share and has a dividend yield of 0.3%. M.D.C. Holdings does not pay a dividend. Lennar Corporation pays out 4.7% of its earnings in the form of a dividend. Lennar Corporation has raised its dividend for 5 consecutive years.

Institutional & Insider Ownership

81.8% of Lennar Corporation shares are owned by institutional investors. Comparatively, 81.5% of M.D.C. Holdings shares are owned by institutional investors. 12.2% of Lennar Corporation shares are owned by insiders. Comparatively, 25.3% of M.D.C. Holdings shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Lennar Corporation beats M.D.C. Holdings on 15 of the 18 factors compared between the two stocks.

About Lennar Corporation

Lennar Corporation is a provider of real estate related financial services, commercial real estate, investment management and finance company. The Company is a homebuilder that operates in various states. Its segments include Homebuilding East, Homebuilding Central, Homebuilding West, Lennar Financial Services, Rialto and Lennar Multifamily. It is a developer of multifamily rental properties. Its Homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development and sale of residential land. It operates primarily under the Lennar brand name. The Lennar Financial Services segment includes mortgage financing, title insurance and closing services for both buyers of its homes and others. The Rialto segment is a real estate, investment management, and finance company. The Lennar Multifamily segment focuses on developing a portfolio of institutional multifamily rental properties in the United States markets.

About M.D.C. Holdings

M.D.C. Holdings, Inc. is engaged in two primary operations, including homebuilding and financial services. The Company’s segments include West, including segments located in Arizona, California, Nevada and Washington; Mountain, including segments located in Colorado and Utah; East, including segments located in Virginia, Florida and Maryland, which includes Pennsylvania and New Jersey; mortgage operations, including HomeAmerican Mortgage Corporation, and Other, which includes Allegiant Insurance Company, Inc., StarAmerican Insurance Ltd., American Home Insurance Agency, Inc. and American Home Title and Escrow Company. The homebuilding operations consist of subsidiary companies that purchases finished lots or develop lots necessary for the construction and sale of single-family detached homes to first-time and first-time move-up homebuyers under the name Richmond American Homes. It also includes land acquisition and development, home construction, and sales and marketing.

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