Reviewing Dream Finders Homes (NYSE:DFH) & Purple Innovation (NASDAQ:PRPL)

Dream Finders Homes (NYSE:DFH) and Purple Innovation (NASDAQ:PRPL) are both small-cap consumer discretionary companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, dividends, valuation and risk.

Institutional and Insider Ownership

95.6% of Dream Finders Homes shares are held by institutional investors. Comparatively, 88.4% of Purple Innovation shares are held by institutional investors. 69.1% of Dream Finders Homes shares are held by company insiders. Comparatively, 54.0% of Purple Innovation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Dream Finders Homes and Purple Innovation”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dream Finders Homes	$4.32 billion	0.31	$217.20 million	$1.43	10.32
Purple Innovation	$453.45 million	0.06	-$51.41 million	($11.24)	-0.52

Dream Finders Homes has higher revenue and earnings than Purple Innovation. Purple Innovation is trading at a lower price-to-earnings ratio than Dream Finders Homes, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and recommmendations for Dream Finders Homes and Purple Innovation, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dream Finders Homes	2	4	0	1	2.00
Purple Innovation	1	2	0	0	1.67

Dream Finders Homes currently has a consensus price target of $26.00, indicating a potential upside of 76.15%. Purple Innovation has a consensus price target of $16.25, indicating a potential upside of 180.17%. Given Purple Innovation’s higher possible upside, analysts clearly believe Purple Innovation is more favorable than Dream Finders Homes.

Profitability

This table compares Dream Finders Homes and Purple Innovation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dream Finders Homes	3.55%	10.38%	3.79%
Purple Innovation	-10.74%	N/A	-10.89%

Risk & Volatility

Dream Finders Homes has a beta of 1.88, meaning that its share price is 88% more volatile than the S&P 500. Comparatively, Purple Innovation has a beta of 1.46, meaning that its share price is 46% more volatile than the S&P 500.

Summary

Dream Finders Homes beats Purple Innovation on 13 of the 14 factors compared between the two stocks.

About Dream Finders Homes

Dream Finders Homes, Inc. operates as a holding company for Dream Finders Holdings LLC that engages in homebuilding business in the United States. It designs, constructs, and sells single-family entry-level, and first-time and second time move-up homes in Charlotte, Raleigh, Jacksonville, Orlando, Denver, the Washington D.C. metropolitan area, Austin, Dallas, and Houston. The company also operates as a licensed home mortgage broker that underwrites, originates, and sells mortgages to Prime Lending; and provides insurance agency services, including closing, escrow, and title insurance, as well as mortgage banking solutions. It sells its homes through its sales representatives and independent real estate brokers. The company was founded in 2008 and is headquartered in Jacksonville, Florida.

About Purple Innovation

Purple Innovation, Inc. designs and manufactures sleep and other products in the United States and internationally. The company offers mattresses, pillows, cushions, bases, sheets, platforms, adjustable bases, mattress protectors, foundations, blankets, duvets, duvet covers, seat cushions, and pet beds under the Purple brand. It markets and sells its products through its e-commerce online channels, retail brick-and-mortar wholesale partners, third-party online retailers, and Purple showrooms, as well as through its website, Purple.com. The company was founded in 2010 and is headquartered in Lehi, Utah.