Head to Head Survey: LGI Homes (NASDAQ:LGIH) versus Lennar (NYSE:LEN)

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

Profitability

This table compares LGI Homes and Lennar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LGI Homes	3.88%	3.55%	1.88%
Lennar	4.09%	6.15%	4.00%

Insider & Institutional Ownership

84.9% of LGI Homes shares are held by institutional investors. Comparatively, 81.1% of Lennar shares are held by institutional investors. 12.6% of LGI Homes shares are held by insiders. Comparatively, 10.1% of Lennar shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares LGI Homes and Lennar”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LGI Homes	$1.71 billion	0.67	$72.55 million	$2.85	17.16
Lennar	$34.19 billion	0.64	$2.08 billion	$5.29	17.39

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

Volatility and Risk

LGI Homes has a beta of 1.88, suggesting that its stock price is 88% more volatile than the S&P 500. Comparatively, Lennar has a beta of 1.36, suggesting that its stock price is 36% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for LGI Homes and Lennar, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LGI Homes	2	1	2	0	2.00
Lennar	11	7	1	0	1.47

LGI Homes presently has a consensus target price of $68.00, suggesting a potential upside of 39.06%. Lennar has a consensus target price of $78.87, suggesting a potential downside of 14.27%. Given LGI Homes’ stronger consensus rating and higher probable upside, equities research analysts plainly believe LGI Homes is more favorable than Lennar.

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.

About Lennar

Lennar Corporation, together with its subsidiaries, operates as a homebuilder primarily under the Lennar brand in the United States. It operates through Homebuilding East, Homebuilding Central, Homebuilding Texas, Homebuilding West, Financial Services, Multifamily, and Lennar Other segments. The company’s homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development, and sale of residential land; and development, construction, and management of multifamily rental properties. It also offers residential mortgage financing, title, insurance, and closing services for home buyers and others, as well as originates and sells securitization commercial mortgage loans. In addition, the company is involved in the fund investment activity. It primarily serves first-time, move-up, active adult, and luxury homebuyers. Lennar Corporation was founded in 1954 and is based in Miami, Florida.