Gafisa SA (NYSE: GFA) and Howard Hughes Corporation (The) (NYSE:HHC) are both construction companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, earnings, risk, profitability and valuation.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Gafisa SA and Howard Hughes Corporation (The), as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gafisa SA 1 0 0 0 1.00
Howard Hughes Corporation (The) 0 1 2 0 2.67

Howard Hughes Corporation (The) has a consensus target price of $144.33, indicating a potential upside of 26.09%. Given Howard Hughes Corporation (The)’s stronger consensus rating and higher possible upside, analysts plainly believe Howard Hughes Corporation (The) is more favorable than Gafisa SA.

Profitability

This table compares Gafisa SA and Howard Hughes Corporation (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gafisa SA -120.24% -25.46% -9.69%
Howard Hughes Corporation (The) 5.69% 4.80% 1.98%

Institutional and Insider Ownership

3.9% of Gafisa SA shares are owned by institutional investors. Comparatively, 83.9% of Howard Hughes Corporation (The) shares are owned by institutional investors. 20.7% of Howard Hughes Corporation (The) shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Gafisa SA and Howard Hughes Corporation (The)’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Gafisa SA $256.86 million 0.40 -$79.46 million ($28.71) -0.26
Howard Hughes Corporation (The) $1.06 billion 4.63 $295.39 million $1.41 81.18

Howard Hughes Corporation (The) has higher revenue and earnings than Gafisa SA. Gafisa SA is trading at a lower price-to-earnings ratio than Howard Hughes Corporation (The), indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Gafisa SA has a beta of 1.85, meaning that its stock price is 85% more volatile than the S&P 500. Comparatively, Howard Hughes Corporation (The) has a beta of 1.43, meaning that its stock price is 43% more volatile than the S&P 500.

Summary

Howard Hughes Corporation (The) beats Gafisa SA on 12 of the 13 factors compared between the two stocks.

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.

Howard Hughes Corporation (The) Company Profile

The Howard Hughes Corporation is a developer of master planned communities and mixed use properties. The Company is engaged in the ownership, management and the redevelopment or repositioning of real estate assets, as well as other real estate opportunities in the form of entitled and unentitled land and other development rights, also called Strategic Developments. It operates through three segments: Master Planned Communities, Operating Assets and Strategic Developments. Its Master Planned Communities segment consists of the development and sale of residential land and the development of commercial land to hold, develop or sell. Its master planned communities include The Woodlands, Summerlin, Maryland, Bridgeland and The Woodlands Hills. As of December 31, 2016, its Operating Assets segment included 54 properties, investments and other assets. As of December 31, 2016, the Strategic Developments segment included 23 development projects.

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