Critical Analysis: Beazer Homes USA (NYSE:BZH) and Persimmon (OTCMKTS:PSMMY)

Beazer Homes USA (NYSE:BZH) and Persimmon (OTCMKTS:PSMMY) are both construction companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Beazer Homes USA and Persimmon, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Beazer Homes USA	1	2	2	0	2.20
Persimmon	0	0	4	1	3.20

Beazer Homes USA currently has a consensus price target of $31.33, suggesting a potential upside of 59.24%. Given Beazer Homes USA’s higher probable upside, equities research analysts plainly believe Beazer Homes USA is more favorable than Persimmon.

Profitability

This table compares Beazer Homes USA and Persimmon’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Beazer Homes USA	0.44%	2.11%	0.97%
Persimmon	N/A	N/A	N/A

Risk & Volatility

Beazer Homes USA has a beta of 2.17, suggesting that its share price is 117% more volatile than the S&P 500. Comparatively, Persimmon has a beta of 1.15, suggesting that its share price is 15% more volatile than the S&P 500.

Earnings and Valuation

This table compares Beazer Homes USA and Persimmon”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Beazer Homes USA	$2.27 billion	0.26	$45.59 million	$0.30	65.59
Persimmon	$4.95 billion	0.97	$376.70 million	N/A	N/A

Persimmon has higher revenue and earnings than Beazer Homes USA.

Insider and Institutional Ownership

85.7% of Beazer Homes USA shares are held by institutional investors. 8.0% of Beazer Homes USA shares are held by insiders. Comparatively, 0.6% of Persimmon shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Beazer Homes USA beats Persimmon on 7 of the 13 factors compared between the two stocks.

About Beazer Homes USA

Beazer Homes USA, Inc. operates as a homebuilder in the United States. It designs, constructs, and sells single-family and multi-family homes under the Beazer Homes, Gatherings, and Choice Plans names. The company also sells its homes through commissioned new home sales counselors and independent brokers in Arizona, California, Nevada, Texas, Indiana, Delaware, Maryland, Tennessee, Virginia, Florida, Georgia, North Carolina, and South Carolina. Beazer Homes USA, Inc. was founded in 1985 and is headquartered in Atlanta, Georgia.

About Persimmon

Persimmon Plc, together with its subsidiaries, operates as a house builder in the United Kingdom. The company offers family housing under the Persimmon Homes brand name; housing under the Charles Church brand name; and social housing under the Westbury Partnerships brand name. It also provides broadband services under the FibreNest brand; and timber frame, insulated wall panels, and roof cassettes under the brand Space4. Further, it offers concrete bricks and roof tile. Persimmon Plc was founded in 1972 and is headquartered in York, the United Kingdom.