Critical Review: Dorel Industries (OTCMKTS:DIIBF) vs. Meritage Homes (NYSE:MTH)

Dorel Industries (OTCMKTS:DIIBF) and Meritage Homes (NYSE:MTH) are both consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, earnings, risk, dividends, analyst recommendations, institutional ownership and valuation.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Dorel Industries and Meritage Homes, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dorel Industries	0	1	0	0	2.00
Meritage Homes	2	7	4	0	2.15

Meritage Homes has a consensus target price of $73.56, suggesting a potential upside of 24.34%. Given Meritage Homes’ stronger consensus rating and higher possible upside, analysts plainly believe Meritage Homes is more favorable than Dorel Industries.

Volatility and Risk

Dorel Industries has a beta of 1.63, suggesting that its share price is 63% more volatile than the S&P 500. Comparatively, Meritage Homes has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500.

Valuation & Earnings

This table compares Dorel Industries and Meritage Homes”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dorel Industries	$1.19 billion	0.03	-$142.22 million	($4.16)	-0.24
Meritage Homes	$5.40 billion	0.71	$453.01 million	$4.78	12.38

Meritage Homes has higher revenue and earnings than Dorel Industries. Dorel Industries is trading at a lower price-to-earnings ratio than Meritage Homes, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

98.4% of Meritage Homes shares are held by institutional investors. 19.3% of Dorel Industries shares are held by company insiders. Comparatively, 2.5% of Meritage Homes shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Dorel Industries and Meritage Homes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dorel Industries	-12.73%	N/A	-11.89%
Meritage Homes	6.11%	7.13%	4.83%

Summary

Meritage Homes beats Dorel Industries on 12 of the 14 factors compared between the two stocks.

About Dorel Industries

Dorel Industries Inc. engages in the design, manufacture, sourcing, marketing, and distribution of home and juvenile products worldwide. The company operates through Dorel Home and Dorel Juvenile segments. The Dorel Home segment offers ready-to assemble furniture and home furnishings products, including metal folding furniture, futons, children's furniture, step stools, hand trucks, ladders, outdoor furniture, and other imported furniture items. This segment markets its products under the DHP, Signature Sleep, Little Seeds, Ameriwood Home, Cosco Home & Office, Queer Eye, Cosmo Living, Novogratz, Real Rooms, Mr. Kate, Baby Relax, Alphason, Bertini, Ntense, and Notio brands. The Dorel Juvenile segment provides children's accessories comprising infant car seats, strollers, home equipment, toys, infant health, and safety aids under the Maxi-Cosi, Tiny Love, Infanti, Safety 1st, Bébé Confort, Quinny, and Cosco brands. The company was formerly known as Dorel Co. Ltd. and changed its name to Dorel Industries Inc. in May 1987. Dorel Industries Inc. was incorporated in 1962 and is headquartered in Westmount, Canada.

About Meritage Homes

Meritage Homes Corporation, together with its subsidiaries, designs and builds single-family attached and detached homes in the United States. The company operates through two segments, Homebuilding and Financial Services. It acquires and develops land; and constructs, markets, and sells homes for entry-level and first move-up buyers in Arizona, California, Colorado, Utah, Texas, Florida, Georgia, North Carolina, South Carolina, and Tennessee. The company also offers title and escrow, mortgage, insurance, and closing/settlement services to its homebuyers. Meritage Homes Corporation was founded in 1985 and is based in Scottsdale, Arizona.