Gafisa SA (NYSE: GFA) and Redfin Corporation (NASDAQ:RDFN) are both small-cap construction companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, dividends, valuation, analyst recommendations, risk and earnings.

Insider & Institutional Ownership

3.9% of Gafisa SA shares are owned by institutional investors. Comparatively, 1.0% of Redfin Corporation shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Gafisa SA and Redfin Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Gafisa SA $263.80 million 0.47 -$333.60 million ($28.71) -0.31
Redfin Corporation $267.19 million 6.97 -$22.52 million N/A N/A

Redfin Corporation has higher revenue and earnings than Gafisa SA.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Gafisa SA and Redfin Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gafisa SA 1 0 0 0 1.00
Redfin Corporation 0 5 3 0 2.38

Redfin Corporation has a consensus target price of $26.86, indicating a potential upside of 17.28%. Given Redfin Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Redfin Corporation is more favorable than Gafisa SA.

Profitability

This table compares Gafisa SA and Redfin Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gafisa SA -120.24% -25.46% -9.69%
Redfin Corporation N/A N/A N/A

Summary

Redfin Corporation beats Gafisa SA on 9 of the 10 factors compared between the two stocks.

Gafisa SA Company Profile

Gafisa S.A. is a diversified national homebuilder. The Company’s segments are Gafisa (for ventures targeted at high and medium income) and Tenda (for ventures targeted at low income). The Company’s brands include Tenda, which serves the affordable entry-level housing segments, Gafisa, which offers a range of residential options to the mid to higher income segments and Alphaville (equity method investment), which focuses on the identification, development and sale of residential communities. In addition, it provides construction services to third parties on certain developments in the Gafisa segment where it retains an equity interest. Its real estate business activities include developments for sale of residential units, land subdivisions and commercial buildings; construction services, and sale of units through its brokerage subsidiaries, Gafisa Vendas Intermediacao Imobiliaria Ltda and Gafisa Vendas in Rio de Janeiro, jointly referred to as Gafisa Vendas.

Redfin Corporation Company Profile

Redfin Corporation is engaged in providing residential real estate brokerage services. The customer can search for homes by neighborhood, city or MLS number, or can refine results using detailed parameters, such as price and number of beds or baths. The Company serves home buyers and sellers. The Company offers online tools to consumers, including Redfin Estimate, which is an automated home-valuation tool. The customer can search homes for sale in Austin, Atlanta, Baltimore, Boston, Charlotte, Chicago, Dallas, Denver, Fort Lauderdale, Houston, Lake Tahoe, Las Vegas, Los Angeles, Miami, Philadelphia, Phoenix, Portland, OR, Raleigh, San Antonio, San Diego, San Francisco, Sacramento, San Jose, Seattle and Washington. The Company serves over 80 metro areas across the United States.

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