Smith Douglas Homes (NYSE:SDHC) and Hooker Furnishings (NASDAQ:HOFT) Critical Contrast

Hooker Furnishings (NASDAQ:HOFT) and Smith Douglas Homes (NYSE:SDHC) are both small-cap consumer discretionary companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, valuation, risk, dividends, institutional ownership, analyst recommendations and earnings.

Analyst Ratings

This is a summary of recent ratings and price targets for Hooker Furnishings and Smith Douglas Homes, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hooker Furnishings	1	1	0	0	1.50
Smith Douglas Homes	1	7	1	0	2.00

Smith Douglas Homes has a consensus target price of $13.62, suggesting a potential upside of 35.71%. Given Smith Douglas Homes’ stronger consensus rating and higher possible upside, analysts clearly believe Smith Douglas Homes is more favorable than Hooker Furnishings.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Hooker Furnishings	-6.62%	4.32%	3.20%
Smith Douglas Homes	0.64%	-0.19%	-0.14%

Volatility and Risk

Hooker Furnishings has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500. Comparatively, Smith Douglas Homes has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500.

Earnings and Valuation

This table compares Hooker Furnishings and Smith Douglas Homes”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hooker Furnishings	$278.14 million	0.48	-$26.97 million	($1.69)	-7.43
Smith Douglas Homes	$971.12 million	0.53	$10.69 million	$0.72	13.94

Smith Douglas Homes has higher revenue and earnings than Hooker Furnishings. Hooker Furnishings 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.

Insider & Institutional Ownership

73.6% of Hooker Furnishings shares are owned by institutional investors. 2.7% of Hooker Furnishings shares are owned by company insiders. Comparatively, 84.2% of Smith Douglas Homes shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

Smith Douglas Homes beats Hooker Furnishings on 9 of the 13 factors compared between the two stocks.

About Hooker Furnishings

Hooker Furnishings Corporation designs, manufactures, imports, and markets residential household, hospitality, and contract furniture. It operates in three segments: Hooker Branded, Home Meridian, and Domestic Upholstery. The Hooker Branded segment offers design categories, including home entertainment, home office, accent, dining, and bedroom furniture under the Hooker Furniture brand; and imported upholstered furniture under the Hooker Upholstery brand. The Home Meridian segment provides home furnishings under the Accentrics Home brand; a range of bedroom, dining room, accent, display cabinet, home office, and youth furnishings under the Pulaski Furniture and Samuel Lawrence Furniture brands; and imported leather motion upholstery under the Prime Resources International brand. This segment also designs and supplies hotel furnishings for four and five-star hotels under the Samuel Lawrence Hospitality brand name. The Domestic Upholstery segment offers motion and stationary leather furniture under the Bradington-Young brand; chairs, sofas, sectionals, recliners, and a variety of accent upholstery pieces under the HF Custom brand; and upholstered furniture, such as private label sectionals, modulars, sofas, chairs, ottomans, benches, beds, and dining chairs for lifestyle specialty retailers under the Shenandoah Furniture brand. This segment also designs and manufactures outdoor furniture under the Sunset West brand. The company supplies upholstered seating and casegoods to upscale senior living and assisted living facilities through designers, design firms, industry dealers, and distributors under the H Contract brand; and interior designer products under the Lifestyle Brands name; and lighting, accessories, and home décor products under the BOBO Intriguing Objects brand. It sells home furnishing products through retailers, such as independent furniture stores, department stores, mass merchants, national chains, catalog merchants, interior designers, and e-commerce retailers primarily in North America. Hooker Furnishings Corporation was incorporated in 1924 and is headquartered in Martinsville, Virginia.

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.