Meritage Corporation (NYSE: MTH) and M/I Homes (NYSE:MHO) are both small-cap construction companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, analyst recommendations, earnings, dividends and profitabiliy.
Risk & Volatility
Meritage Corporation has a beta of 1.48, indicating that its stock price is 48% more volatile than the S&P 500. Comparatively, M/I Homes has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500.
This table compares Meritage Corporation and M/I Homes’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of recent ratings and target prices for Meritage Corporation and M/I Homes, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Meritage Corporation presently has a consensus target price of $39.19, indicating a potential downside of 4.88%. M/I Homes has a consensus target price of $32.00, indicating a potential upside of 23.31%. Given M/I Homes’ stronger consensus rating and higher possible upside, analysts plainly believe M/I Homes is more favorable than Meritage Corporation.
Valuation & Earnings
This table compares Meritage Corporation and M/I Homes’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Meritage Corporation||$3.12 billion||0.53||$238.33 million||$3.61||11.41|
|M/I Homes||$1.83 billion||0.35||$133.10 million||$2.12||12.24|
Meritage Corporation has higher revenue and earnings than M/I Homes. Meritage Corporation is trading at a lower price-to-earnings ratio than M/I Homes, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
97.7% of Meritage Corporation shares are owned by institutional investors. 5.6% of Meritage Corporation shares are owned by insiders. Comparatively, 4.7% of M/I Homes shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Meritage Corporation beats M/I Homes on 9 of the 13 factors compared between the two stocks.
Meritage Corporation Company Profile
Meritage Homes Corporation operates as a holding company. The Company is a designer and builder of single-family homes. The Company operates through two segments: homebuilding and financial services. The homebuilding segment is engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes, and providing warranty and customer services. It builds homes in the regions of the United States and offers a range of homes that are designed for a range of homebuyers, including first-time, move-up, active adult and luxury. As of December 31, 2016, it had homebuilding operations in three regions: West, Central and East, which were consisted of nine states: Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina and Tennessee. It also operates Carefree Title Agency, Inc. (Carefree Title) company. Carefree Title’s core business includes title insurance and closing/settlement services it offers to its homebuyers.
M/I Homes Company Profile
M/I Homes, Inc. is a builder of single-family homes. The Company consists of two operations: homebuilding and financial services. It operates through Midwest homebuilding, Southern homebuilding, Mid-Atlantic homebuilding and financial services operations segments. The Company and its subsidiaries are engaged primarily in the construction and sale of single-family residential homes in 15 markets: Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Chicago, Illinois; Minneapolis/St. Paul, Minnesota; Tampa, Orlando and Sarasota, Florida; Austin, Dallas/Fort Worth, Houston and San Antonio, Texas; Charlotte and Raleigh, North Carolina; and the Virginia and Maryland suburbs of Washington, D.C. The Company’s financial services operations support its homebuilding operations by providing mortgage loans and title services to the customers of its homebuilding operations. It markets and sells homes primarily under the M/I Homes brand (M/I Homes and Showcase Collection (by M/I)).
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