Critical Analysis: Frontdoor (NASDAQ:FTDR) versus Caesarstone (NASDAQ:CSTE)

Frontdoor (NASDAQ:FTDR) and Caesarstone (NASDAQ:CSTE) are both construction companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Risk and Volatility

Frontdoor has a beta of 1.34, indicating that its share price is 34% more volatile than the S&P 500. Comparatively, Caesarstone has a beta of -0.09, indicating that its share price is 109% less volatile than the S&P 500.

Insider & Institutional Ownership

33.7% of Caesarstone shares are held by institutional investors. 1.5% of Frontdoor shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Frontdoor and Caesarstone”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Frontdoor	$1.84 billion	2.24	$235.00 million	$3.51	16.33
Caesarstone	$443.22 million	0.18	-$42.83 million	($2.03)	-1.15

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

Analyst Recommendations

This is a breakdown of current recommendations for Frontdoor and Caesarstone, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Frontdoor	1	3	2	0	2.17
Caesarstone	1	0	0	0	1.00

Frontdoor presently has a consensus price target of $59.75, suggesting a potential upside of 4.22%. Given Frontdoor’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Frontdoor is more favorable than Caesarstone.

Profitability

This table compares Frontdoor and Caesarstone’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Frontdoor	12.87%	122.74%	14.33%
Caesarstone	-18.44%	-19.35%	-9.18%

Summary

Frontdoor beats Caesarstone on 13 of the 14 factors compared between the two stocks.

About Frontdoor

Frontdoor, Inc. provides home warranties in the United States in the United States. Its customizable home warranties help customers protect and maintain their homes from costly and unplanned breakdowns of essential home systems and appliances. The company’s home warranty customers subscribe to an annual service plan agreement that covers the repair or replacement of principal components of approximately 20 home systems and appliances, including electrical, plumbing, water heaters, refrigerators, dishwashers, and ranges/ovens/cooktops, as well as electronics, pools, and spas and pumps; and heating, ventilation, and air conditioning systems. It also offers on-demand home services and a one-stop app experience for home repair and maintenance; and Streem technology, an app that empowers homeowners by connecting them in real time through video chat with qualified experts to diagnose and solve their problems. The company serves homeowners under the Frontdoor, American Home Shield, HSA, OneGuard, Landmark Home Warranty, Frontdoor logo, and Streem brands. The company was founded in 1971 and is headquartered in Memphis, Tennessee.

About Caesarstone

Caesarstone Ltd., together with its subsidiaries, designs, develops, manufactures, and markets engineered stone and other materials under the Caesarstone brand in the United States, Canada, Latin America, Australia, Asia, Europe, the Middle East and Africa, and Israel. The company’s engineered stone slabs are primarily used as indoor and outdoor kitchen countertops in the renovation and remodeling, and residential construction sectors. Its products are also used in other applications, such as vanity tops, wall panels, back splashes, floor tiles, stairs, furniture, and other interior and exterior surfaces that are used in various residential and non-residential applications. The company also offers porcelain products under the Lioli brand for countertops, flooring, and cladding applications; sells natural stone, sinks, and various ancillary fabrication tools and materials; and resells natural stones, as well as various ancillaries, and fabrication and installation accessories, as well as provides fabrication and installation services. It sells its products directly to wholesalers, resellers, and fabricators; and through direct sales force and indirect network of independent distributors. The company was formerly known as Caesarstone Sdot Yam Ltd. and changed its name to Caesarstone Ltd. in June 2016. Caesarstone Ltd. was founded in 1987 and is headquartered in Menashe, Israel.