Financial Survey: Lennar (NYSE:LEN) & Stanley Black & Decker (NYSE:SWK)

Stanley Black & Decker (NYSE:SWK) and Lennar (NYSE:LEN) are both large-cap consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitability, dividends, institutional ownership, valuation, earnings and analyst recommendations.

Risk and Volatility

Stanley Black & Decker has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500. Comparatively, Lennar has a beta of 1.39, meaning that its share price is 39% more volatile than the S&P 500.

Profitability

This table compares Stanley Black & Decker and Lennar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stanley Black & Decker	4.07%	8.78%	3.73%
Lennar	4.93%	7.08%	4.61%

Insider & Institutional Ownership

87.8% of Stanley Black & Decker shares are held by institutional investors. Comparatively, 81.1% of Lennar shares are held by institutional investors. 0.7% of Stanley Black & Decker shares are held by insiders. Comparatively, 10.1% of Lennar shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Stanley Black & Decker pays an annual dividend of $3.32 per share and has a dividend yield of 3.3%. Lennar pays an annual dividend of $2.00 per share and has a dividend yield of 2.3%. Stanley Black & Decker pays out 81.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lennar pays out 31.3% of its earnings in the form of a dividend. Stanley Black & Decker has raised its dividend for 58 consecutive years and Lennar has raised its dividend for 1 consecutive years. Stanley Black & Decker is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Stanley Black & Decker and Lennar”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stanley Black & Decker	$15.13 billion	1.00	$401.90 million	$4.10	24.38
Lennar	$34.19 billion	0.62	$2.08 billion	$6.39	13.70

Lennar has higher revenue and earnings than Stanley Black & Decker. Lennar is trading at a lower price-to-earnings ratio than Stanley Black & Decker, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Stanley Black & Decker and Lennar, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stanley Black & Decker	1	6	3	0	2.20
Lennar	10	7	1	0	1.50

Stanley Black & Decker presently has a consensus target price of $92.25, indicating a potential downside of 7.72%. Lennar has a consensus target price of $92.13, indicating a potential upside of 5.21%. Given Lennar’s higher possible upside, analysts clearly believe Lennar is more favorable than Stanley Black & Decker.

Summary

Lennar beats Stanley Black & Decker on 9 of the 17 factors compared between the two stocks.

About Stanley Black & Decker

Stanley Black & Decker, Inc. engages in the provision of power and hand tools, and related accessories, products, services and equipment for oil and gas, infrastructure applications, commercial electronic security and monitoring systems, healthcare solutions, and mechanical access solutions. It operates through the Tools and Outdoor and Industrial segments. The Tools and Outdoor segment refers to power tools, hand tools, accessories and storage, and outdoor power equipment product lines. The Industrial segment includes the engineered fastening and infrastructure businesses. The company was founded by Frederick T. Stanley in 1843 and is headquartered in New Britain, CT.

About Lennar

Lennar Corporation, together with its subsidiaries, operates as a homebuilder primarily under the Lennar brand in the United States. It operates through Homebuilding East, Homebuilding Central, Homebuilding Texas, Homebuilding West, Financial Services, Multifamily, and Lennar Other segments. The company’s homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development, and sale of residential land; and development, construction, and management of multifamily rental properties. It also offers residential mortgage financing, title, insurance, and closing services for home buyers and others, as well as originates and sells securitization commercial mortgage loans. In addition, the company is involved in the fund investment activity. It primarily serves first-time, move-up, active adult, and luxury homebuyers. Lennar Corporation was founded in 1954 and is based in Miami, Florida.