Toll Brothers (NYSE: TOL) and Beazer Homes USA (NYSE:BZH) are both construction companies, but which is the better business? We will compare the two companies based on the strength of their risk, analyst recommendations, earnings, profitability, institutional ownership, dividends and valuation.

Risk and Volatility

Toll Brothers has a beta of 1.52, meaning that its stock price is 52% more volatile than the S&P 500. Comparatively, Beazer Homes USA has a beta of 2.79, meaning that its stock price is 179% more volatile than the S&P 500.

Insider & Institutional Ownership

80.3% of Toll Brothers shares are held by institutional investors. Comparatively, 81.5% of Beazer Homes USA shares are held by institutional investors. 8.8% of Toll Brothers shares are held by company insiders. Comparatively, 7.6% of Beazer Homes USA shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Toll Brothers 7.67% 9.71% 4.33%
Beazer Homes USA -0.14% 3.01% 0.88%

Dividends

Toll Brothers pays an annual dividend of $0.32 per share and has a dividend yield of 0.8%. Beazer Homes USA does not pay a dividend. Toll Brothers pays out 13.2% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of current ratings and recommmendations for Toll Brothers and Beazer Homes USA, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Toll Brothers 1 6 8 0 2.47
Beazer Homes USA 1 4 0 0 1.80

Toll Brothers presently has a consensus price target of $39.27, indicating a potential upside of 0.16%. Beazer Homes USA has a consensus price target of $13.17, indicating a potential downside of 18.32%. Given Toll Brothers’ stronger consensus rating and higher possible upside, equities analysts plainly believe Toll Brothers is more favorable than Beazer Homes USA.

Valuation and Earnings

This table compares Toll Brothers and Beazer Homes USA’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Toll Brothers $5.41 billion 1.19 $507.09 million $2.43 16.14
Beazer Homes USA $1.88 billion 0.27 $74.43 million ($0.08) -201.47

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

Summary

Toll Brothers beats Beazer Homes USA on 12 of the 15 factors compared between the two stocks.

Toll Brothers Company Profile

Toll Brothers, Inc. is engaged in designing, building, marketing, selling and arranging financing for detached and attached homes in luxury residential communities. The Company operates through two segments: Traditional Home Building and Toll Brothers City Living (City Living). Within the Traditional Home Building segment, it operates in five geographic segments in the United States: the North, consisting of Connecticut, Illinois, Massachusetts, Michigan, Minnesota, New Jersey and New York; the Mid-Atlantic, consisting of Delaware, Maryland, Pennsylvania and Virginia; the South, consisting of Florida, North Carolina and Texas; the West, consisting of Arizona, Colorado, Nevada and Washington, and California. City Living is the Company’s urban development division. Its products include Traditional Home Building Product and City Living Product. Its Traditional Home Building Product includes detached homes, move-up, executive, estate, and active-adult and age-qualified lines of home.

Beazer Homes USA Company Profile

Beazer Homes USA, Inc. is a geographically diversified homebuilder. As of September 30, 2016, the Company had operations in 13 states within over three geographic regions in the United States. The Company’s segments include West, East and Southeast. The Company markets and sells its products through its Website, www.beazer.com; mobile site, m.beazer.com; real estate listing sites, online advertising, including search engine marketing and display advertising, social media, video, brochures, direct marketing and out-of-home advertising, including billboards and signage, as well as other activities. It offers lender choice and personalization. The Company’s Choice Plans allows buyers to choose living areas, such as the kitchen and master bathroom. Its West segment includes Arizona, California, Nevada and Texas. Its East segment includes Indiana, Maryland/Delaware, Tennessee and Virginia. Its Southeast segment includes Florida, Georgia, North Carolina and South Carolina.

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