Critical Comparison: Dream Finders Homes (NYSE:DFH) and Purple Innovation (NASDAQ:PRPL)

Purple Innovation (NASDAQ:PRPL) and Dream Finders Homes (NYSE:DFH) are both small-cap consumer discretionary companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, institutional ownership, dividends, risk, valuation, profitability and analyst recommendations.

Risk and Volatility

Purple Innovation has a beta of 1.46, meaning that its share price is 46% more volatile than the S&P 500. Comparatively, Dream Finders Homes has a beta of 1.88, meaning that its share price is 88% more volatile than the S&P 500.

Profitability

This table compares Purple Innovation and Dream Finders Homes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Purple Innovation	-10.74%	N/A	-10.89%
Dream Finders Homes	3.55%	10.38%	3.79%

Valuation & Earnings

This table compares Purple Innovation and Dream Finders Homes”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Purple Innovation	$453.45 million	0.06	-$51.41 million	($11.24)	-0.52
Dream Finders Homes	$4.32 billion	0.31	$217.20 million	$1.43	10.32

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

Analyst Ratings

This is a breakdown of current ratings and target prices for Purple Innovation and Dream Finders Homes, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Purple Innovation	1	2	0	0	1.67
Dream Finders Homes	2	4	0	1	2.00

Purple Innovation currently has a consensus price target of $16.25, suggesting a potential upside of 180.17%. Dream Finders Homes has a consensus price target of $26.00, suggesting a potential upside of 76.15%. Given Purple Innovation’s higher possible upside, equities analysts plainly believe Purple Innovation is more favorable than Dream Finders Homes.

Insider and Institutional Ownership

88.4% of Purple Innovation shares are held by institutional investors. Comparatively, 95.6% of Dream Finders Homes shares are held by institutional investors. 54.0% of Purple Innovation shares are held by company insiders. Comparatively, 69.1% of Dream Finders Homes shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Dream Finders Homes beats Purple Innovation on 13 of the 14 factors compared between the two stocks.

About Purple Innovation

Purple Innovation, Inc. designs and manufactures sleep and other products in the United States and internationally. The company offers mattresses, pillows, cushions, bases, sheets, platforms, adjustable bases, mattress protectors, foundations, blankets, duvets, duvet covers, seat cushions, and pet beds under the Purple brand. It markets and sells its products through its e-commerce online channels, retail brick-and-mortar wholesale partners, third-party online retailers, and Purple showrooms, as well as through its website, Purple.com. The company was founded in 2010 and is headquartered in Lehi, Utah.

About Dream Finders Homes

Dream Finders Homes, Inc. operates as a holding company for Dream Finders Holdings LLC that engages in homebuilding business in the United States. It designs, constructs, and sells single-family entry-level, and first-time and second time move-up homes in Charlotte, Raleigh, Jacksonville, Orlando, Denver, the Washington D.C. metropolitan area, Austin, Dallas, and Houston. The company also operates as a licensed home mortgage broker that underwrites, originates, and sells mortgages to Prime Lending; and provides insurance agency services, including closing, escrow, and title insurance, as well as mortgage banking solutions. It sells its homes through its sales representatives and independent real estate brokers. The company was founded in 2008 and is headquartered in Jacksonville, Florida.