Smith Douglas Homes (NYSE:SDHC) versus Legacy Housing (NASDAQ:LEGH) Financial Analysis

Legacy Housing (NASDAQ:LEGH) and Smith Douglas Homes (NYSE:SDHC) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their dividends, risk, earnings, institutional ownership, profitability, valuation and analyst recommendations.

Institutional & Insider Ownership

89.4% of Legacy Housing shares are owned by institutional investors. 30.1% of Legacy Housing shares are owned by insiders. Comparatively, 82.7% of Smith Douglas Homes shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility & Risk

Legacy Housing has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500. Comparatively, Smith Douglas Homes has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500.

Earnings & Valuation

This table compares Legacy Housing and Smith Douglas Homes”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Legacy Housing	$184.19 million	2.84	$61.64 million	$1.95	11.23
Smith Douglas Homes	$975.46 million	0.89	$16.07 million	$1.25	13.54

Legacy Housing has higher earnings, but lower revenue than Smith Douglas Homes. Legacy Housing is trading at a lower price-to-earnings ratio than Smith Douglas Homes, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Legacy Housing and Smith Douglas Homes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Legacy Housing	26.66%	9.47%	8.80%
Smith Douglas Homes	1.13%	0.12%	0.10%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Legacy Housing and Smith Douglas Homes, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Legacy Housing	0	4	0	0	2.00
Smith Douglas Homes	3	5	1	0	1.78

Legacy Housing currently has a consensus price target of $21.00, indicating a potential downside of 4.11%. Smith Douglas Homes has a consensus price target of $16.60, indicating a potential downside of 1.91%. Given Smith Douglas Homes’ higher probable upside, analysts clearly believe Smith Douglas Homes is more favorable than Legacy Housing.

Summary

Legacy Housing beats Smith Douglas Homes on 8 of the 14 factors compared between the two stocks.

About Legacy Housing

Legacy Housing Corporation engages in the building, sale, and financing of manufactured homes and tiny houses primarily in the southern United States. It manufactures and provides for the transport of mobile homes, including 1 to 5 bedrooms with 1 to 3 1/2 bathrooms; and provides wholesale financing to dealers and mobile home parks, as well as retail financing to consumers. The company also offers inventory financing for its independent retailers; consumer financing for its products; and financing to manufactured housing community owners that buy or lease its products for use in their rental housing communities. In addition, it involved in financing and developing new manufactured home communities. The company markets its homes under the Legacy brand through a network of independent retailers and company-owned stores; and directly to manufactured home communities. Legacy Housing Corporation was founded in 2005 and is headquartered in Bedford, Texas.

About Smith Douglas Homes

Smith Douglas Homes Corp., together with its subsidiaries, engages in the design, construction, and sale of single-family homes in the southeastern United States. It also provides closing, escrow, and title insurance services. The company sells its products to entry-level and empty-nest homebuyers. Smith Douglas Homes Corp. was founded in 2008 and is headquartered in Woodstock, Georgia.