Critical Survey: Dorel Industries (OTCMKTS:DIIBF) and Toll Brothers (NYSE:TOL)

Toll Brothers (NYSE:TOL) and Dorel Industries (OTCMKTS:DIIBF) are both consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, analyst recommendations, profitability, institutional ownership, risk, dividends and earnings.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Toll Brothers	11.14%	14.21%	8.24%
Dorel Industries	-12.73%	N/A	-11.58%

Insider & Institutional Ownership

91.8% of Toll Brothers shares are held by institutional investors. 1.4% of Toll Brothers shares are held by insiders. Comparatively, 19.3% of Dorel Industries shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Toll Brothers and Dorel Industries, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Toll Brothers	1	4	15	0	2.70
Dorel Industries	0	1	0	0	2.00

Toll Brothers currently has a consensus price target of $167.27, suggesting a potential upside of 16.59%. Given Toll Brothers’ stronger consensus rating and higher probable upside, equities analysts plainly believe Toll Brothers is more favorable than Dorel Industries.

Valuation and Earnings

This table compares Toll Brothers and Dorel Industries”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Toll Brothers	$10.97 billion	1.22	$1.35 billion	$12.46	11.51
Dorel Industries	$1.19 billion	0.03	-$142.22 million	($4.16)	-0.27

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

Risk and Volatility

Toll Brothers has a beta of 1.35, indicating that its share price is 35% more volatile than the S&P 500. Comparatively, Dorel Industries has a beta of 1.58, indicating that its share price is 58% more volatile than the S&P 500.

Summary

Toll Brothers beats Dorel Industries on 12 of the 14 factors compared between the two stocks.

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.

About Dorel Industries

Dorel Industries Inc. engages in the design, manufacture, sourcing, marketing, and distribution of home and juvenile products worldwide. The company operates through Dorel Home and Dorel Juvenile segments. The Dorel Home segment offers ready-to assemble furniture and home furnishings products, including metal folding furniture, futons, children's furniture, step stools, hand trucks, ladders, outdoor furniture, and other imported furniture items. This segment markets its products under the DHP, Signature Sleep, Little Seeds, Ameriwood Home, Cosco Home & Office, Queer Eye, Cosmo Living, Novogratz, Real Rooms, Mr. Kate, Baby Relax, Alphason, Bertini, Ntense, and Notio brands. The Dorel Juvenile segment provides children's accessories comprising infant car seats, strollers, home equipment, toys, infant health, and safety aids under the Maxi-Cosi, Tiny Love, Infanti, Safety 1st, Bébé Confort, Quinny, and Cosco brands. The company was formerly known as Dorel Co. Ltd. and changed its name to Dorel Industries Inc. in May 1987. Dorel Industries Inc. was incorporated in 1962 and is headquartered in Westmount, Canada.