Analyzing Toll Brothers (NYSE:TOL) & Bassett Furniture Industries (NASDAQ:BSET)

Bassett Furniture Industries (NASDAQ:BSET) and Toll Brothers (NYSE:TOL) are both consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, analyst recommendations, risk, institutional ownership and dividends.

Volatility and Risk

Bassett Furniture Industries has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500. Comparatively, Toll Brothers has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500.

Earnings & Valuation

This table compares Bassett Furniture Industries and Toll Brothers”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bassett Furniture Industries	$335.60 million	0.59	$6.10 million	$0.79	28.89
Toll Brothers	$10.76 billion	1.24	$1.35 billion	$12.46	11.58

Toll Brothers has higher revenue and earnings than Bassett Furniture Industries. Toll Brothers is trading at a lower price-to-earnings ratio than Bassett Furniture Industries, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

54.4% of Bassett Furniture Industries shares are held by institutional investors. Comparatively, 91.8% of Toll Brothers shares are held by institutional investors. 7.3% of Bassett Furniture Industries shares are held by insiders. Comparatively, 1.4% of Toll Brothers shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Bassett Furniture Industries and Toll Brothers, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bassett Furniture Industries	0	1	1	1	3.00
Toll Brothers	1	4	14	1	2.75

Toll Brothers has a consensus price target of $166.67, suggesting a potential upside of 15.55%. Given Toll Brothers’ higher probable upside, analysts plainly believe Toll Brothers is more favorable than Bassett Furniture Industries.

Profitability

This table compares Bassett Furniture Industries and Toll Brothers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bassett Furniture Industries	2.02%	4.36%	2.26%
Toll Brothers	11.14%	14.21%	8.24%

Dividends

Bassett Furniture Industries pays an annual dividend of $0.80 per share and has a dividend yield of 3.5%. Toll Brothers pays an annual dividend of $1.04 per share and has a dividend yield of 0.7%. Bassett Furniture Industries pays out 101.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Toll Brothers pays out 8.3% of its earnings in the form of a dividend. Bassett Furniture Industries has raised its dividend for 4 consecutive years and Toll Brothers has raised its dividend for 5 consecutive years.

Summary

Toll Brothers beats Bassett Furniture Industries on 13 of the 17 factors compared between the two stocks.

About Bassett Furniture Industries

Bassett Furniture Industries, Incorporated, together with its subsidiaries, manufactures, markets, and retails home furnishings in the United States and internationally. It operates in three segments: Wholesale, Retail Company-Owned Stores, and Corporate and Other. The company engages in the design, manufacture, sourcing, sale, and distribution of furniture products, including dining, bedroom and bedding, home decorations, rugs, and outdoor furniture to a network of company-owned retail stores, licensee-owned stores, and independent retailers. The company also distributes its products through multi-line furniture stores, including Bassett galleries or design centers, as well as sells online; and engages in wood and upholstery operations. In addition, it owns and leases land, retail store properties, warehouses, and distribution centers. Bassett Furniture Industries, Incorporated was founded in 1902 and is based in Bassett, Virginia.

About Toll Brothers

Toll Brothers, Inc., together with its subsidiaries, designs, builds, markets, sells, and arranges finance for a range of detached and attached homes in luxury residential communities in the United States. It designs, builds, markets, and sells condominiums through Toll Brothers City Living. The company also develops a range of single-story living and first-floor primary bedroom suite home designs, as well as communities with recreational amenities, such as golf courses, marinas, pool complexes, country clubs, and fitness and recreation centers; and develops, operates, and rents apartments. In addition, it provides various interior fit-out options, such as flooring, wall tile, plumbing, cabinets, fixtures, appliances, lighting, and home-automation and security technologies. Further, the company owns and operates architectural, engineering, mortgage, title, land development, insurance, smart home technology, landscaping, lumber distribution, house component assembly, and component manufacturing operations. It serves luxury first-time, move-up, empty-nester, active-adult, and second-home buyers. Toll Brothers, Inc. was founded in 1967 and is headquartered in Fort Washington, Pennsylvania.