Beazer Homes USA (NYSE: BZH) and New Home Company Inc. (The) (NYSE:NWHM) are both small-cap construction companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, profitability, dividends, risk and earnings.

Insider and Institutional Ownership

80.7% of Beazer Homes USA shares are held by institutional investors. Comparatively, 57.2% of New Home Company Inc. (The) shares are held by institutional investors. 7.6% of Beazer Homes USA shares are held by insiders. Comparatively, 24.2% of New Home Company Inc. (The) shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Beazer Homes USA and New Home Company Inc. (The)’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Beazer Homes USA $1.88 billion 0.33 $74.43 million ($0.08) -240.97
New Home Company Inc. (The) $769.49 million 0.31 $36.07 million $1.04 11.09

Beazer Homes USA has higher revenue and earnings than New Home Company Inc. (The). Beazer Homes USA is trading at a lower price-to-earnings ratio than New Home Company Inc. (The), indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Beazer Homes USA has a beta of 2.71, indicating that its share price is 171% more volatile than the S&P 500. Comparatively, New Home Company Inc. (The) has a beta of 1.9, indicating that its share price is 90% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Beazer Homes USA and New Home Company Inc. (The), as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Beazer Homes USA 1 4 1 0 2.00
New Home Company Inc. (The) 0 0 0 0 N/A

Beazer Homes USA presently has a consensus target price of $15.13, suggesting a potential downside of 21.55%. Given Beazer Homes USA’s higher probable upside, equities research analysts clearly believe Beazer Homes USA is more favorable than New Home Company Inc. (The).

Profitability

This table compares Beazer Homes USA and New Home Company Inc. (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Beazer Homes USA -0.14% 3.01% 0.88%
New Home Company Inc. (The) 2.82% 10.25% 4.74%

Summary

Beazer Homes USA beats New Home Company Inc. (The) on 8 of the 13 factors compared between the two stocks.

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.

New Home Company Inc. (The) Company Profile

The New Home Company Inc. is a homebuilding company. The Company focuses on the design, construction and sale of consumer-driven homes in various metropolitan areas within certain markets in California and Arizona, including coastal Southern California, the San Francisco Bay area, metro Sacramento and the greater Phoenix area. The Company’s segments include homebuilding and fee building. The homebuilding operations consist of divisions in Northern California, Southern California and its division in Arizona, which is established through the purchase of lots in an unconsolidated joint venture. The Company is focused on building and selling homes for its own account. It is focused on identifying sites and creating communities that allow it to design, construct and sell consumer-driven single-family detached and attached homes in major metropolitan areas in coastal Southern California, the San Francisco Bay area, metro Sacramento and the greater Phoenix area.

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