Critical Analysis: KB Home (KBH) vs. Taylor Morrison Home (TMHC)
KB Home (NYSE: KBH) and Taylor Morrison Home (NYSE:TMHC) are both mid-cap construction companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, institutional ownership, risk, valuation, earnings, profitability and analyst recommendations.
KB Home pays an annual dividend of $0.10 per share and has a dividend yield of 0.3%. Taylor Morrison Home does not pay a dividend. KB Home pays out 7.2% of its earnings in the form of a dividend.
This table compares KB Home and Taylor Morrison Home’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|KB Home||$3.59 billion||0.74||$105.61 million||$1.39||22.24|
|Taylor Morrison Home||$3.55 billion||0.81||$52.61 million||$1.84||13.14|
KB Home has higher revenue and earnings than Taylor Morrison Home. Taylor Morrison Home is trading at a lower price-to-earnings ratio than KB Home, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
96.7% of KB Home shares are held by institutional investors. Comparatively, 59.1% of Taylor Morrison Home shares are held by institutional investors. 8.6% of KB Home shares are held by insiders. Comparatively, 2.4% of Taylor Morrison Home shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This table compares KB Home and Taylor Morrison Home’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Taylor Morrison Home||2.41%||4.18%||2.21%|
This is a summary of recent ratings and target prices for KB Home and Taylor Morrison Home, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Taylor Morrison Home||0||3||1||0||2.25|
KB Home presently has a consensus target price of $22.27, suggesting a potential downside of 27.96%. Taylor Morrison Home has a consensus target price of $24.00, suggesting a potential downside of 0.70%. Given Taylor Morrison Home’s stronger consensus rating and higher possible upside, analysts clearly believe Taylor Morrison Home is more favorable than KB Home.
Volatility & Risk
KB Home has a beta of 1.69, meaning that its stock price is 69% more volatile than the S&P 500. Comparatively, Taylor Morrison Home has a beta of 1.47, meaning that its stock price is 47% more volatile than the S&P 500.
KB Home beats Taylor Morrison Home on 10 of the 16 factors compared between the two stocks.
About KB Home
KB HOME is a homebuilding company. The Company is engaged in selling and building a range of new homes designed primarily for first-time, move-up and active adult homebuyers, including attached and detached single-family residential homes. It operates through five segments, which consist of four homebuilding segments and one financial services segment. Its homebuilding segments include West Coast, Southwest, Central and Southeast. The homebuilding segments are engaged in the acquisition and development of land primarily for residential purposes. The financial services segment offers property and casualty insurance and, in certain instances, earthquake, flood and personal property insurance to its homebuyers in the same markets as its homebuilding segments, and provides title services in the majority of markets located within its Central and Southeast homebuilding segments. It offers homes in development communities, at urban in-fill locations and as part of mixed-use projects.
About Taylor Morrison Home
Taylor Morrison Home Corporation is a homebuilder, which designs, builds and sells single-family detached and attached homes. The Company is also a land developer, with a portfolio of lifestyle and master-planned communities. Its segments include East, which includes Atlanta, Charlotte, North Florida, Raleigh, Southwest Florida and Tampa; Central, which includes Austin, Dallas, and Houston (each of the Dallas and Houston markets include both a Taylor Morrison division and a Darling Homes division); West, which includes Bay Area, Chicago, Denver, Phoenix, Sacramento and Southern California, and Mortgage Operations, which includes Taylor Morrison Home Funding, LLC (TMHF) and Inspired Title Services, LLC (Inspired Title). It operates under the Taylor Morrison and Darling Homes brand names. The Company also provides financial services to customers through its mortgage subsidiary, TMHF, and title insurance and closing settlement services through its title company, Inspired Title.
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