Reviewing Smith Douglas Homes (NYSE:SDHC) and Universal Electronics (NASDAQ:UEIC)

Smith Douglas Homes (NYSE:SDHC) and Universal Electronics (NASDAQ:UEIC) are both small-cap consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, dividends, valuation and analyst recommendations.

Institutional and Insider Ownership

79.3% of Universal Electronics shares are owned by institutional investors. 84.2% of Smith Douglas Homes shares are owned by company insiders. Comparatively, 17.1% of Universal Electronics shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings for Smith Douglas Homes and Universal Electronics, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Smith Douglas Homes	2	7	1	0	1.90
Universal Electronics	1	2	0	0	1.67

Smith Douglas Homes presently has a consensus price target of $13.90, indicating a potential upside of 28.70%. Universal Electronics has a consensus price target of $4.25, indicating a potential downside of 16.34%. Given Smith Douglas Homes’ stronger consensus rating and higher probable upside, research analysts plainly believe Smith Douglas Homes is more favorable than Universal Electronics.

Volatility and Risk

Smith Douglas Homes has a beta of 0.83, meaning that its stock price is 17% less volatile than the S&P 500. Comparatively, Universal Electronics has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500.

Valuation & Earnings

This table compares Smith Douglas Homes and Universal Electronics”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Smith Douglas Homes	$971.12 million	0.57	$10.69 million	$0.72	15.00
Universal Electronics	$368.29 million	0.18	-$18.60 million	($1.16)	-4.38

Smith Douglas Homes has higher revenue and earnings than Universal Electronics. Universal Electronics 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 Smith Douglas Homes and Universal Electronics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Smith Douglas Homes	0.64%	-0.19%	-0.14%
Universal Electronics	-4.57%	2.70%	1.44%

Summary

Smith Douglas Homes beats Universal Electronics on 10 of the 14 factors compared between the two stocks.

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.

About Universal Electronics

Universal Electronics Inc. designs, develops, manufactures, ships, and supports control and sensor technology solutions in the United States, the People’s Republic of China, rest of Asia, Europe, Latin America, and internationally. The company offers voice-enabled automatically-programmed universal two-way radio frequency, as well as infrared remote controls to video service providers, original equipment manufacturers (OEMs), retailers, and private label customers; wall-mount and handheld thermostat controllers and connected accessories for smart energy management systems to OEM customers, hotels, hospitality, and system integrators; proprietary and standards-based RF sensors for residential security, safety, and home automation applications; and integrated circuits on which its software and universal device control database is embedded to OEMs, video service providers, and private label customers. It also provides software, firmware and technology solutions that can enable devices such as Smart TVs, hybrid set-top boxes, audio systems, smart speakers, game consoles, and other consumer electronic and smart home devices to wirelessly connect and interoperate within home networks; cloud-services that support its embedded software and hardware solutions; intellectual property that the company licenses to OEMs and video service providers; embedded and cloud-enabled software for firmware update provisioning and digital rights management validation services to consumer electronics brands; and AV accessories, including universal remote controls, television wall mounts and stands, and digital television antennas. In addition, the company QuickSet, a software application that can be embedded in entertainment or smart home platform or can be delivered as a cloud-based service, through QuickSet Cloud, to enable universal device setup, interoperability, and control. Universal Electronics Inc. was incorporated in 1986 and is based in Scottsdale, Arizona.