Forestar Group (NYSE: FOR) and Gafisa SA (NYSE:GFA) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, risk, dividends, institutional ownership and profitabiliy.

Volatility and Risk

Forestar Group has a beta of 1.95, indicating that its stock price is 95% more volatile than the S&P 500. Comparatively, Gafisa SA has a beta of 2.02, indicating that its stock price is 102% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Forestar Group and Gafisa SA, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Forestar Group 0 0 0 0 N/A
Gafisa SA 1 0 0 0 1.00

Valuation & Earnings

This table compares Forestar Group and Gafisa SA’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Forestar Group $182.00 million 3.94 $44.26 million $2.08 8.22
Gafisa SA $281.75 million 0.40 -$67.03 million ($25.65) -0.31

Forestar Group has higher revenue, but lower earnings than Gafisa SA. Gafisa SA is trading at a lower price-to-earnings ratio than Forestar Group, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

84.2% of Forestar Group shares are held by institutional investors. Comparatively, 5.0% of Gafisa SA shares are held by institutional investors. 3.1% of Forestar Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Forestar Group and Gafisa SA’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Forestar Group 48.48% 16.18% 12.25%
Gafisa SA -84.96% -17.04% -7.10%

Summary

Forestar Group beats Gafisa SA on 8 of the 10 factors compared between the two stocks.

Forestar Group Company Profile

Forestar Group Inc. is a residential and mixed-use real estate development company. The Company operates through three segments. The Real Estate segment secures entitlements and develops infrastructure on its lands, for single-family residential and mixed-use communities. The Mineral resources segment is focused on its owned oil and gas mineral interests through promoting exploration, development and production activities. The Other segment manages its timber holdings, recreational leases and water resource initiatives. As of December 31, 2016, its core community development business had directly or through ventures interests in 50 residential and mixed-use projects consisting of 4,600 acres of real estate located in 10 states and 14 markets. As of December 31, 2016, its non-core assets included approximately 523,000 net acres of owned mineral assets, 19,000 acres of timberland and undeveloped land, four multifamily assets and approximately 20,000 acres of groundwater leases.

Gafisa SA Company Profile

Gafisa S.A. is a diversified national homebuilder. The Company’s segments are Gafisa (for ventures targeted at high and medium income) and Tenda (for ventures targeted at low income). The Company’s brands include Tenda, which serves the affordable entry-level housing segments, Gafisa, which offers a range of residential options to the mid to higher income segments and Alphaville (equity method investment), which focuses on the identification, development and sale of residential communities. In addition, it provides construction services to third parties on certain developments in the Gafisa segment where it retains an equity interest. Its real estate business activities include developments for sale of residential units, land subdivisions and commercial buildings; construction services, and sale of units through its brokerage subsidiaries, Gafisa Vendas Intermediacao Imobiliaria Ltda and Gafisa Vendas in Rio de Janeiro, jointly referred to as Gafisa Vendas.

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