Beazer Homes USA (NYSE: BZH) and LGI Homes (NASDAQ:LGIH) are both small-cap cyclical consumer goods & services companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitability.

Analyst Ratings

This is a breakdown of recent recommendations for Beazer Homes USA and LGI Homes, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Beazer Homes USA 1 3 1 0 2.00
LGI Homes 0 4 2 0 2.33

Beazer Homes USA currently has a consensus target price of $19.00, indicating a potential upside of 1.17%. LGI Homes has a consensus target price of $53.00, indicating a potential downside of 24.78%. Given Beazer Homes USA’s higher possible upside, equities analysts clearly believe Beazer Homes USA is more favorable than LGI Homes.

Valuation and Earnings

This table compares Beazer Homes USA and LGI Homes’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Beazer Homes USA $1.92 billion 0.33 $31.81 million $0.94 19.98
LGI Homes $838.32 million 1.83 $75.03 million $4.31 16.35

LGI Homes has lower revenue, but higher earnings than Beazer Homes USA. LGI Homes is trading at a lower price-to-earnings ratio than Beazer Homes USA, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Beazer Homes USA has a beta of 2.69, indicating that its share price is 169% more volatile than the S&P 500. Comparatively, LGI Homes has a beta of 0.27, indicating that its share price is 73% less volatile than the S&P 500.

Institutional and Insider Ownership

83.5% of Beazer Homes USA shares are owned by institutional investors. Comparatively, 92.0% of LGI Homes shares are owned by institutional investors. 7.6% of Beazer Homes USA shares are owned by company insiders. Comparatively, 13.6% of LGI Homes shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Beazer Homes USA and LGI Homes’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Beazer Homes USA 1.66% 6.29% 1.86%
LGI Homes 9.26% 25.51% 11.10%

Summary

LGI Homes beats Beazer Homes USA on 11 of the 14 factors compared between the two stocks.

Beazer Homes USA Company Profile

Beazer Homes USA, Inc. is a geographically diversified homebuilder. As of September 30, 2016, the Company had operations in 13 states within over three geographic regions in the United States. The Company’s segments include West, East and Southeast. The Company markets and sells its products through its Website, www.beazer.com; mobile site, m.beazer.com; real estate listing sites, online advertising, including search engine marketing and display advertising, social media, video, brochures, direct marketing and out-of-home advertising, including billboards and signage, as well as other activities. It offers lender choice and personalization. The Company’s Choice Plans allows buyers to choose living areas, such as the kitchen and master bathroom. Its West segment includes Arizona, California, Nevada and Texas. Its East segment includes Indiana, Maryland/Delaware, Tennessee and Virginia. Its Southeast segment includes Florida, Georgia, North Carolina and South Carolina.

LGI Homes Company Profile

LGI Homes, Inc. is a homebuilder and land developer. The Company is engaged in the design, construction, marketing and sale of new homes in markets in Texas, Arizona, Florida, Georgia, New Mexico, South Carolina, North Carolina, Colorado, Washington and Tennessee. The Company operates through five segments: the Texas division, the Southwest division, the Southeast division, the Florida division and the Northwest division. The Texas division includes homebuilding operations in Houston, Dallas/Fort Worth, San Antonio and Austin locations. The Southwest division includes homebuilding operations in Phoenix, Tucson, Albuquerque, Denver and Colorado Springs locations. The Southeast division includes homebuilding operations in Atlanta, Charlotte and Nashville locations. The Florida division includes homebuilding operations in Tampa, Orlando, Fort Myers and Jacksonville locations. The Northwest division includes homebuilding operations in Seattle location.

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