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

Insider & Institutional Ownership

81.6% of M.D.C. Holdings shares are owned by institutional investors. Comparatively, 3.3% of Lennar Corporation shares are owned by institutional investors. 25.3% of M.D.C. Holdings shares are owned by company insiders. Comparatively, 15.0% of Lennar Corporation shares are owned 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.

Dividends

Lennar Corporation pays an annual dividend of $0.16 per share. 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 increased its dividend for 5 consecutive years.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
M.D.C. Holdings 2 5 0 0 1.71
Lennar Corporation 0 0 0 0 N/A

M.D.C. Holdings currently has a consensus price target of $29.00, suggesting a potential downside of 8.40%.

Risk & Volatility

M.D.C. Holdings has a beta of 1.35, meaning that its share price is 35% more volatile than the S&P 500. Comparatively, Lennar Corporation has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500.

Profitability

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

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

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
M.D.C. Holdings $2.58 billion 0.64 $199.46 million $2.36 13.39
Lennar Corporation N/A N/A N/A $3.42 N/A

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

Summary

M.D.C. Holdings beats Lennar Corporation on 6 of the 11 factors compared between the two stocks.

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.

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.

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