PulteGroup (PHM) & LGI Homes (LGIH) Head to Head Survey

LGI Homes (NASDAQ: LGIH) and PulteGroup (NYSE:PHM) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, institutional ownership, dividends, analyst recommendations, valuation, profitabiliy and earnings.

Institutional & Insider Ownership

87.7% of LGI Homes shares are owned by institutional investors. Comparatively, 92.5% of PulteGroup shares are owned by institutional investors. 13.6% of LGI Homes shares are owned by insiders. Comparatively, 0.7% of PulteGroup shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares LGI Homes and PulteGroup’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LGI Homes 8.95% 22.09% 9.51%
PulteGroup 7.35% 13.43% 6.22%

Valuation & Earnings

This table compares LGI Homes and PulteGroup’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
LGI Homes $838.77 million 1.25 $111.56 million $3.35 14.47
PulteGroup $8.09 billion 0.94 $1.11 billion $1.80 14.06

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

Volatility & Risk

LGI Homes has a beta of 0.07, indicating that its stock price is 93% less volatile than the S&P 500. Comparatively, PulteGroup has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500.

Dividends

PulteGroup pays an annual dividend of $0.36 per share and has a dividend yield of 1.4%. LGI Homes does not pay a dividend. PulteGroup pays out 20.0% of its earnings in the form of a dividend. PulteGroup has increased its dividend for 3 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and target prices for LGI Homes and PulteGroup, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LGI Homes 0 3 0 0 2.00
PulteGroup 1 7 5 0 2.31

LGI Homes currently has a consensus price target of $34.00, indicating a potential downside of 29.87%. PulteGroup has a consensus price target of $24.91, indicating a potential downside of 1.58%. Given PulteGroup’s stronger consensus rating and higher probable upside, analysts clearly believe PulteGroup is more favorable than LGI Homes.

Summary

PulteGroup beats LGI Homes on 9 of the 17 factors compared between the two stocks.

LGI Homes Company Profile

LGI Homes, Inc. is a homebuilder and land developer. The Company is engaged in the design, construction, marketing and sale of new homes in markets in Texas, Arizona, Florida, Georgia, New Mexico, South Carolina, North Carolina, Colorado, Washington and Tennessee. The Company operates through five segments: the Texas division, the Southwest division, the Southeast division, the Florida division and the Northwest division. The Texas division includes homebuilding operations in Houston, Dallas/Fort Worth, San Antonio and Austin locations. The Southwest division includes homebuilding operations in Phoenix, Tucson, Albuquerque, Denver and Colorado Springs locations. The Southeast division includes homebuilding operations in Atlanta, Charlotte and Nashville locations. The Florida division includes homebuilding operations in Tampa, Orlando, Fort Myers and Jacksonville locations. The Northwest division includes homebuilding operations in Seattle location.

PulteGroup Company Profile

PulteGroup, Inc. is a homebuilder in the United States. The Company’s segments include Homebuilding and Financial Services. Its Homebuilding operations are engaged in the acquisition and development of land primarily for residential purposes within the United States and the construction of housing on such land. Its Financial Services operations consist principally of mortgage banking and title operations. The Company conducts its financial services business, through Pulte Mortgage LLC (Pulte Mortgage) and other subsidiaries. Pulte Mortgage arranges financing through the origination of mortgage loans. The Company’s subsidiaries are engaged in the homebuilding business. It offers a product line to meet the needs of homebuyers in its focused markets. Through its brands, which include Centex, Pulte Homes, Del Webb, DiVosta Homes, and John Wieland Homes and Neighborhoods, the Company offers a range of home designs, including single-family detached, townhouses, condominiums and duplexes.

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