Taylor Morrison Home (NYSE: TMHC) and D. R. Horton (NYSE:DHI) are both mid-cap construction companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, dividends, risk, profitability and valuation.

Profitability

This table compares Taylor Morrison Home and D. R. Horton’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Taylor Morrison Home 2.41% 4.18% 2.21%
D. R. Horton 7.53% 16.55% 10.40%

Volatility & Risk

Taylor Morrison Home has a beta of 1.49, meaning that its stock price is 49% more volatile than the S&P 500. Comparatively, D. R. Horton has a beta of 1.28, meaning that its stock price is 28% more volatile than the S&P 500.

Valuation & Earnings

This table compares Taylor Morrison Home and D. R. Horton’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Taylor Morrison Home $3.55 billion 0.80 $52.61 million $1.84 12.91
D. R. Horton $14.09 billion 1.33 $1.04 billion $2.73 18.32

D. R. Horton has higher revenue and earnings than Taylor Morrison Home. Taylor Morrison Home is trading at a lower price-to-earnings ratio than D. R. Horton, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Taylor Morrison Home and D. R. Horton, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Taylor Morrison Home 0 4 1 0 2.20
D. R. Horton 0 6 10 0 2.63

Taylor Morrison Home currently has a consensus price target of $23.25, suggesting a potential downside of 2.11%. D. R. Horton has a consensus price target of $44.07, suggesting a potential downside of 11.87%. Given Taylor Morrison Home’s higher possible upside, research analysts plainly believe Taylor Morrison Home is more favorable than D. R. Horton.

Insider and Institutional Ownership

59.3% of Taylor Morrison Home shares are held by institutional investors. Comparatively, 80.9% of D. R. Horton shares are held by institutional investors. 2.4% of Taylor Morrison Home shares are held by insiders. Comparatively, 7.2% of D. R. Horton shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

D. R. Horton pays an annual dividend of $0.40 per share and has a dividend yield of 0.8%. Taylor Morrison Home does not pay a dividend. D. R. Horton pays out 14.7% of its earnings in the form of a dividend. Taylor Morrison Home has increased its dividend for 5 consecutive years.

Summary

D. R. Horton beats Taylor Morrison Home on 13 of the 17 factors compared between the two stocks.

Taylor Morrison Home 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.

D. R. Horton Company Profile

D.R. Horton, Inc. is a homebuilding company. The Company constructed and sold homes in 27 states and 79 markets, as of September 30, 2015. The Company’s segments include its 39 homebuilding divisions, its financial services operations and its other business activities. In the homebuilding segment, the Company builds and sells single-family detached homes and attached homes, such as town homes, duplexes, triplexes and condominiums. The Company’s 39 homebuilding divisions are aggregated into six segments: East Region, South Central Region, Midwest Region, West Region, Southwest Region and Southeast Region. In the financial services segment, the Company sells mortgages and collects fees for title insurance agency and closing services. The Company has subsidiaries that conduct insurance-related operations; construct and own income-producing rental properties; own non-residential real estate, including ranch land and improvements, and own and operate oil and gas-related assets.

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