LGI Homes (NASDAQ: LGIH) and Taylor Morrison Home Corporation (NYSE:TMHC) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, risk, earnings, dividends, valuation, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

93.9% of LGI Homes shares are owned by institutional investors. Comparatively, 59.3% of Taylor Morrison Home Corporation shares are owned by institutional investors. 13.6% of LGI Homes shares are owned by company insiders. Comparatively, 2.4% of Taylor Morrison Home Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for LGI Homes and Taylor Morrison Home Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LGI Homes 0 4 2 0 2.33
Taylor Morrison Home Corporation 0 4 1 0 2.20

LGI Homes presently has a consensus target price of $53.00, suggesting a potential downside of 21.41%. Taylor Morrison Home Corporation has a consensus target price of $23.25, suggesting a potential downside of 2.11%. Given Taylor Morrison Home Corporation’s higher possible upside, analysts clearly believe Taylor Morrison Home Corporation is more favorable than LGI Homes.

Valuation & Earnings

This table compares LGI Homes and Taylor Morrison Home Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
LGI Homes $838.32 million 1.75 $75.03 million $4.32 15.61
Taylor Morrison Home Corporation $3.55 billion 0.80 $52.61 million $1.84 12.91

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

Volatility & Risk

LGI Homes has a beta of 0.2, suggesting that its stock price is 80% less volatile than the S&P 500. Comparatively, Taylor Morrison Home Corporation has a beta of 1.49, suggesting that its stock price is 49% more volatile than the S&P 500.

Profitability

This table compares LGI Homes and Taylor Morrison Home Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LGI Homes 9.26% 25.51% 11.10%
Taylor Morrison Home Corporation 2.41% 4.18% 2.21%

Summary

LGI Homes beats Taylor Morrison Home Corporation on 11 of the 14 factors compared between the two stocks.

LGI Homes Company Profile

LGI Homes, Inc. is a homebuilder and land developer. The Company is engaged in the design, construction, marketing and sale of new homes in markets in Texas, Arizona, Florida, Georgia, New Mexico, South Carolina, North Carolina, Colorado, Washington and Tennessee. The Company operates through five segments: the Texas division, the Southwest division, the Southeast division, the Florida division and the Northwest division. The Texas division includes homebuilding operations in Houston, Dallas/Fort Worth, San Antonio and Austin locations. The Southwest division includes homebuilding operations in Phoenix, Tucson, Albuquerque, Denver and Colorado Springs locations. The Southeast division includes homebuilding operations in Atlanta, Charlotte and Nashville locations. The Florida division includes homebuilding operations in Tampa, Orlando, Fort Myers and Jacksonville locations. The Northwest division includes homebuilding operations in Seattle location.

Taylor Morrison Home Corporation Company Profile

Taylor Morrison Home Corporation is a homebuilder, which designs, builds and sells single-family detached and attached homes. The Company is also a land developer, with a portfolio of lifestyle and master-planned communities. Its segments include East, which includes Atlanta, Charlotte, North Florida, Raleigh, Southwest Florida and Tampa; Central, which includes Austin, Dallas, and Houston (each of the Dallas and Houston markets include both a Taylor Morrison division and a Darling Homes division); West, which includes Bay Area, Chicago, Denver, Phoenix, Sacramento and Southern California, and Mortgage Operations, which includes Taylor Morrison Home Funding, LLC (TMHF) and Inspired Title Services, LLC (Inspired Title). It operates under the Taylor Morrison and Darling Homes brand names. The Company also provides financial services to customers through its mortgage subsidiary, TMHF, and title insurance and closing settlement services through its title company, Inspired Title.

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