Critical Comparison: Five Point (NYSE:FPH) vs. LGI Homes (NASDAQ:LGIH)

Five Point (NYSE:FPH) and LGI Homes (NASDAQ:LGIH) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, risk, profitability, institutional ownership, analyst recommendations, earnings and valuation.

Institutional and Insider Ownership

38.1% of Five Point shares are held by institutional investors. Comparatively, 84.9% of LGI Homes shares are held by institutional investors. 21.5% of Five Point shares are held by insiders. Comparatively, 12.3% of LGI Homes shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Five Point and LGI Homes”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Five Point	$197.43 million	4.04	$68.30 million	$1.09	4.91
LGI Homes	$2.20 billion	0.60	$196.07 million	$6.63	8.61

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

Risk & Volatility

Five Point has a beta of 1.53, suggesting that its share price is 53% more volatile than the S&P 500. Comparatively, LGI Homes has a beta of 1.69, suggesting that its share price is 69% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Five Point and LGI Homes, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Five Point	0	0	1	0	3.00
LGI Homes	1	2	2	0	2.20

LGI Homes has a consensus price target of $71.6667, suggesting a potential upside of 25.49%. Given LGI Homes’ higher probable upside, analysts clearly believe LGI Homes is more favorable than Five Point.

Profitability

This table compares Five Point and LGI Homes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Five Point	39.43%	3.61%	2.52%
LGI Homes	7.63%	8.00%	4.21%

Summary

LGI Homes beats Five Point on 10 of the 14 factors compared between the two stocks.

About Five Point

Five Point Holdings, LLC, through its subsidiary, Five Point Operating Company, LP, owns and develops mixed-use and planned communities in Orange County, Los Angeles County, and San Francisco County. The company operates in four segments: Valencia, San Francisco, Great Park, and Commercial. It sells residential and commercial land sites to homebuilders, commercial developers, and commercial buyers; operates and owns a commercial office, research and development, medical campus, and other properties; and provides development and property management services. The company was formerly known as Newhall Holding Company, LLC and changed its name to Five Point Holdings, LLC in May 2016. Five Point Holdings, LLC was incorporated in 2009 and is headquartered in Irvine, California.

About LGI Homes

LGI Homes, Inc. designs, constructs, and sells homes. It offers entry-level homes, such as attached and detached homes, and active adult homes under the LGI Homes brand name; and luxury series homes under the Terrata Homes brand name. The company also engages in the wholesale business, which include building and selling homes to large institutions looking to acquire single-family rental properties. It serves customers in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada, West Virginia, Virginia, Pennsylvania, Maryland, and Utah. LGI Homes, Inc. was founded in 2003 and is headquartered in The Woodlands, Texas.