Taylor Morrison Home (NYSE: TMHC) and New Home (NYSE:NWHM) are both construction companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, dividends, earnings, institutional ownership and analyst recommendations.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Taylor Morrison Home $3.55 billion 0.80 $52.61 million $1.84 12.85
New Home $694.46 million 0.36 $21.02 million $0.98 12.26

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

Analyst Recommendations

This is a summary of current ratings for Taylor Morrison Home and New Home, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Taylor Morrison Home 0 3 1 0 2.25
New Home 0 0 0 0 N/A

Taylor Morrison Home presently has a consensus target price of $24.00, suggesting a potential upside of 1.48%. Given Taylor Morrison Home’s higher possible upside, research analysts plainly believe Taylor Morrison Home is more favorable than New Home.

Profitability

This table compares Taylor Morrison Home and New Home’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%
New Home 2.73% 9.52% 4.26%

Risk and Volatility

Taylor Morrison Home has a beta of 1.47, meaning that its stock price is 47% more volatile than the S&P 500. Comparatively, New Home has a beta of 1.87, meaning that its stock price is 87% more volatile than the S&P 500.

Institutional & Insider Ownership

59.2% of Taylor Morrison Home shares are held by institutional investors. Comparatively, 55.7% of New Home shares are held by institutional investors. 2.4% of Taylor Morrison Home shares are held by insiders. Comparatively, 24.2% of New Home shares are held by 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.

Summary

Taylor Morrison Home beats New Home on 8 of the 13 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.

New Home 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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