Critical Analysis: M/I Homes (MHO) vs. Beazer Homes USA (BZH)

M/I Homes (NYSE: BZH) and Beazer Homes USA (NYSE:BZH) are both small-cap construction companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, risk and profitability.

Analyst Recommendations

This is a summary of recent recommendations and price targets for M/I Homes and Beazer Homes USA, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
M/I Homes 0 0 2 0 3.00
Beazer Homes USA 0 2 1 0 2.33

M/I Homes currently has a consensus price target of $39.50, indicating a potential upside of 54.00%. Beazer Homes USA has a consensus price target of $19.00, indicating a potential upside of 57.94%. Given Beazer Homes USA’s higher probable upside, analysts clearly believe Beazer Homes USA is more favorable than M/I Homes.

Volatility and Risk

M/I Homes has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500. Comparatively, Beazer Homes USA has a beta of 2.47, suggesting that its share price is 147% more volatile than the S&P 500.

Institutional and Insider Ownership

95.0% of M/I Homes shares are held by institutional investors. Comparatively, 85.9% of Beazer Homes USA shares are held by institutional investors. 3.9% of M/I Homes shares are held by insiders. Comparatively, 7.6% of Beazer Homes USA shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares M/I Homes and Beazer Homes USA’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
M/I Homes 3.91% 12.69% 5.19%
Beazer Homes USA -3.59% 10.99% 3.05%

Valuation & Earnings

This table compares M/I Homes and Beazer Homes USA’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
M/I Homes $1.96 billion 0.37 $72.08 million $2.88 8.91
Beazer Homes USA $1.92 billion 0.21 $31.81 million $1.54 7.81

M/I Homes has higher revenue and earnings than Beazer Homes USA. Beazer Homes USA 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.

Summary

M/I Homes beats Beazer Homes USA on 10 of the 14 factors compared between the two stocks.

M/I Homes Company Profile

M/I Homes, Inc., together with its subsidiaries, operates as a builder of single-family homes in Ohio, Indiana, Illinois, Minnesota, Maryland, Virginia, North Carolina, Florida, and Texas, the United States. The company operates through Midwest Homebuilding, Southern Homebuilding, Mid-Atlantic Homebuilding, and Financial Services segments. It designs, constructs, markets, and sells single-family homes and attached townhomes to first-time, move-up, empty-nester, and luxury buyers under the M/I Homes and Showcase Collection brand names. The company also purchases undeveloped land to develop into developed lots for the construction of single-family homes, as well as for sale to others. In addition, it originates and sells mortgages; and serves as a title insurance agent by providing title insurance policies, examination, and closing services to purchasers of its homes. The company was formerly known as M/I Schottenstein Homes, Inc. and changed its name to M/I Homes, Inc. in January 2004. M/I Homes, Inc. was incorporated in 1973 and is based in Columbus, Ohio.

Beazer Homes USA Company Profile

Beazer Homes USA, Inc. operates as a homebuilder in the United States. The company designs, constructs, and sells single-family and multi-family homes for entry-level, move-up, or retirement-oriented home buyers under the Beazer Homes brand name. It sells its homes through commissioned new home sales counselors and independent brokers in Arizona, California, Nevada, Texas, Delaware, Indiana, Maryland, Tennessee, Virginia, Florida, Georgia, North Carolina, and South Carolina. Beazer Homes USA, Inc. was founded in 1985 and is headquartered in Atlanta, Georgia.

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