Meritage Corporation (NYSE: MTH) and Lennar Corporation (NYSE:LEN) are both construction companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, valuation, institutional ownership and earnings.

Dividends

Lennar Corporation pays an annual dividend of $0.16 per share and has a dividend yield of 0.3%. Meritage Corporation does not pay a dividend. Lennar Corporation pays out 4.7% of its earnings in the form of a dividend.

Profitability

This table compares Meritage Corporation and Lennar Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Meritage Corporation 4.94% 10.74% 5.16%
Lennar Corporation 6.78% 12.57% 5.69%

Volatility and Risk

Meritage Corporation has a beta of 1.46, meaning that its share price is 46% more volatile than the S&P 500. Comparatively, Lennar Corporation has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Meritage Corporation and Lennar Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Meritage Corporation 2 6 1 0 1.89
Lennar Corporation 0 8 9 1 2.61

Meritage Corporation presently has a consensus target price of $40.29, indicating a potential downside of 0.90%. Lennar Corporation has a consensus target price of $56.31, indicating a potential upside of 7.96%. Given Lennar Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe Lennar Corporation is more favorable than Meritage Corporation.

Insider and Institutional Ownership

98.2% of Meritage Corporation shares are held by institutional investors. Comparatively, 81.1% of Lennar Corporation shares are held by institutional investors. 5.6% of Meritage Corporation shares are held by insiders. Comparatively, 12.2% of Lennar Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Meritage Corporation and Lennar Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Meritage Corporation $3.12 billion 0.53 $241.92 million $3.64 11.17
Lennar Corporation $11.81 billion 0.90 $1.36 billion $3.42 15.25

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

Summary

Lennar Corporation beats Meritage Corporation on 13 of the 17 factors compared between the two stocks.

About Meritage Corporation

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.

About Lennar Corporation

Lennar Corporation is a provider of real estate related financial services, commercial real estate, investment management and finance company. The Company is a homebuilder that operates in various states. Its segments include Homebuilding East, Homebuilding Central, Homebuilding West, Lennar Financial Services, Rialto and Lennar Multifamily. It is a developer of multifamily rental properties. Its Homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development and sale of residential land. It operates primarily under the Lennar brand name. The Lennar Financial Services segment includes mortgage financing, title insurance and closing services for both buyers of its homes and others. The Rialto segment is a real estate, investment management, and finance company. The Lennar Multifamily segment focuses on developing a portfolio of institutional multifamily rental properties in the United States markets.

Receive News & Ratings for Meritage Corporation Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Meritage Corporation and related companies with MarketBeat.com's FREE daily email newsletter.