Analyzing Mohawk Industries (NYSE:MHK) and LGI Homes (NASDAQ:LGIH)

Mohawk Industries (NYSE:MHK) and LGI Homes (NASDAQ:LGIH) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their profitability, analyst recommendations, dividends, earnings, risk, valuation and institutional ownership.

Analyst Ratings

This is a summary of current ratings and recommmendations for Mohawk Industries and LGI Homes, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mohawk Industries	0	12	3	1	2.31
LGI Homes	2	2	2	0	2.00

Mohawk Industries currently has a consensus target price of $130.50, suggesting a potential upside of 2.89%. LGI Homes has a consensus target price of $72.75, suggesting a potential upside of 47.21%. Given LGI Homes’ higher probable upside, analysts plainly believe LGI Homes is more favorable than Mohawk Industries.

Insider & Institutional Ownership

79.0% of Mohawk Industries shares are owned by institutional investors. Comparatively, 84.9% of LGI Homes shares are owned by institutional investors. 17.9% of Mohawk Industries shares are owned by insiders. Comparatively, 12.6% of LGI Homes shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Mohawk Industries has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500. Comparatively, LGI Homes has a beta of 1.84, suggesting that its stock price is 84% more volatile than the S&P 500.

Earnings and Valuation

This table compares Mohawk Industries and LGI Homes”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mohawk Industries	$10.79 billion	0.80	$369.90 million	$7.55	16.80
LGI Homes	$1.71 billion	0.67	$72.55 million	$2.85	17.34

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

Profitability

This table compares Mohawk Industries and LGI Homes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mohawk Industries	4.15%	7.50%	4.60%
LGI Homes	3.88%	3.55%	1.88%

Summary

Mohawk Industries beats LGI Homes on 11 of the 15 factors compared between the two stocks.

About Mohawk Industries

Mohawk Industries, Inc. designs, manufactures, sources, distributes, and markets flooring products for residential and commercial remodeling, and new construction channels in the United States, Europe, Latin America, and internationally. It operates through three segments: Global Ceramic, Flooring North America, and Flooring Rest of the World. The company provides ceramic, porcelain, and natural stone tiles products for floor and wall applications; natural stones, porcelain slabs, and quartz countertops, as well as installation materials; floor covering products comprising broadloom carpets, carpet tiles, rugs and mats, carpet pads, laminates, medium-density fiberboards, wood floorings, luxury vinyl tiles, and sheet vinyl; and roofing panels, insulation boards, mezzanine flooring products, medium-density fiberboard, and chipboards. It also licenses its intellectual property to flooring manufacturers. The company sells its products under the American Olean, Daltile, Decortiles, Eliane, EmilGroup, KAI, Kerama Marazzi, Marazzi, Ragno, Aladdin Commercial, Durkan, Foss, IVC, Karastan, Mohawk, Mohawk Group, Mohawk Home, Pergo, Portico, Quick-Step, Feltex, GH Commercial, Godfrey Hirst, Hycraft, IVC Commercial, IVC Home, Lentex, Leoline, and Moduleo, Redbook, Unilin, and Vitromex brands. It offers its products to company-owned service centers and stores, company-operated distributors, floor covering retailers, wholesalers, mass merchandisers, department stores, shop at home, buying groups, ceramic tile specialists, e-commerce retailers, residential builders, independent distributors, commercial contractors, and commercial end users. The company was incorporated in 1988 and is headquartered in Calhoun, Georgia.

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.