Gafisa (NYSE: GFA) and Fortune Brands Home & Security (NYSE:FBHS) are both construction companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, institutional ownership, earnings and risk.

Insider & Institutional Ownership

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5.9% of Gafisa shares are owned by institutional investors. Comparatively, 88.2% of Fortune Brands Home & Security shares are owned by institutional investors. 1.7% of Fortune Brands Home & Security shares are owned by company 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.

Volatility & Risk

Gafisa has a beta of 2.09, indicating that its share price is 109% more volatile than the S&P 500. Comparatively, Fortune Brands Home & Security has a beta of 1.39, indicating that its share price is 39% more volatile than the S&P 500.

Profitability

This table compares Gafisa and Fortune Brands Home & Security’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gafisa -138.50% -39.31% -12.72%
Fortune Brands Home & Security 8.95% 18.73% 8.94%

Earnings & Valuation

This table compares Gafisa and Fortune Brands Home & Security’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gafisa $190.80 million 0.49 -$266.17 million N/A N/A
Fortune Brands Home & Security $5.28 billion 1.69 $472.60 million $3.08 19.13

Fortune Brands Home & Security has higher revenue and earnings than Gafisa.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Gafisa and Fortune Brands Home & Security, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gafisa 3 0 0 0 1.00
Fortune Brands Home & Security 0 5 8 0 2.62

Fortune Brands Home & Security has a consensus target price of $73.62, indicating a potential upside of 24.94%. Given Fortune Brands Home & Security’s stronger consensus rating and higher probable upside, analysts clearly believe Fortune Brands Home & Security is more favorable than Gafisa.

Dividends

Gafisa pays an annual dividend of $0.59 per share and has a dividend yield of 8.8%. Fortune Brands Home & Security pays an annual dividend of $0.80 per share and has a dividend yield of 1.4%. Fortune Brands Home & Security pays out 26.0% of its earnings in the form of a dividend. Fortune Brands Home & Security has raised its dividend for 4 consecutive years.

Summary

Fortune Brands Home & Security beats Gafisa on 12 of the 15 factors compared between the two stocks.

About Gafisa

Gafisa S.A. operates as a homebuilder in Brazil. The company develops residential units, such as luxury buildings with swimming pools, gyms, visitor parking, and other amenities for upper-income customers; buildings for middle-income customers; and entry-level buildings and house units for lower-income customers. Gafisa S.A. also develops residential land subdivisions for sale; and provides construction services to third parties, and technical and real estate management services. The company was incorporated in 1996 and is headquartered in São Paulo, Brazil.

About Fortune Brands Home & Security

Fortune Brands Home & Security, Inc., together with its subsidiaries, provides home and security products for residential home repair, remodeling, new construction, and security applications. It operates in four segments: Cabinets, Plumbing, Doors, and Security. The Cabinets segment manufactures custom, semi-custom, and stock cabinetry, as well as vanities for the kitchen, bath, and other parts of the home directly to kitchen and bath dealers, home centers, wholesalers, and builders in North America. The Plumbing segment manufactures, assembles, and sells faucets, accessories, kitchen sinks, and waste disposals in the United States, Canada China, Mexico, Southeast Asia, Europe, and South America directly through its own sales force, as well as through independent manufacturers' representatives primarily to wholesalers, home centers, mass merchandisers, and industrial distributors. The Doors segment manufactures and sells fiberglass and steel entry doors to home centers, millwork building products and wholesale distributors, and specialty dealers, as well as to the remodeling and renovation markets in the United States and Canada. The Security segment manufactures and sells key-controlled and combination padlocks, bicycle and cable locks, built-in locker locks, door hardware, automotive locks, trailer and towing locks, electronic access control solutions, and other specialty safety and security devices for consumer use to hardware, home center, and other retail outlets. It also offers lock systems and fire resistant safes to locksmiths, industrial and institutional users, and original equipment manufacturers. This segment sells its products in the United States, Canada, Europe, Central America, Japan, and Australia. The company was founded in 1988 and is headquartered in Deerfield, Illinois.

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