Analyzing Dream Finders Homes (NYSE:DFH) and TopBuild (NYSE:BLD)

TopBuild (NYSE:BLD) and Dream Finders Homes (NYSE:DFH) are both consumer discretionary 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 profitability.

Analyst Ratings

This is a summary of current ratings and price targets for TopBuild and Dream Finders Homes, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TopBuild	0	9	4	1	2.43
Dream Finders Homes	2	4	0	1	2.00

TopBuild currently has a consensus price target of $465.00, suggesting a potential upside of 31.16%. Dream Finders Homes has a consensus price target of $26.00, suggesting a potential upside of 103.68%. Given Dream Finders Homes’ higher probable upside, analysts plainly believe Dream Finders Homes is more favorable than TopBuild.

Institutional and Insider Ownership

95.7% of TopBuild shares are held by institutional investors. Comparatively, 95.6% of Dream Finders Homes shares are held by institutional investors. 0.5% of TopBuild shares are held by company insiders. Comparatively, 69.1% of Dream Finders Homes 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 TopBuild and Dream Finders Homes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TopBuild	8.95%	23.53%	8.61%
Dream Finders Homes	4.16%	12.65%	4.62%

Volatility and Risk

TopBuild has a beta of 1.8, indicating that its stock price is 80% more volatile than the S&P 500. Comparatively, Dream Finders Homes has a beta of 1.85, indicating that its stock price is 85% more volatile than the S&P 500.

Earnings & Valuation

This table compares TopBuild and Dream Finders Homes”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TopBuild	$5.62 billion	1.77	$521.73 million	$17.80	19.92
Dream Finders Homes	$4.32 billion	0.27	$217.20 million	$1.72	7.42

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

Summary

TopBuild beats Dream Finders Homes on 11 of the 14 factors compared between the two stocks.

About TopBuild

TopBuild Corp., together with its subsidiaries, engages in the installation and distribution of insulation and other building material products to the construction industry. The company operates in two segments, Installation and Specialty Distribution. It provides insulation products and accessories, glass and windows, rain gutters, garage doors, fireplaces, roofing materials, closet shelving, and other products. The company also offers insulation installation services for fiberglass batts and rolls, blown-in loose fill fiberglass, polyurethane spray foam, and blown-in loose fill cellulose applications. In addition, it distributes building and mechanical insulation, insulation accessories, and other building product materials for the residential, commercial, and industrial end markets. The company serves single-family homebuilders, single-family custom builders, multi-family builders, commercial general contractors, remodelers, and individual homeowners, as well as insulation contractors, gutter contractors, weatherization contractors, other contractors, dealers, metal building erectors, and modular home builders. It operates installation branches and distribution centers in the United States and Canada. The company was formerly known as Masco SpinCo Corp. and changed its name to TopBuild Corp. in March 2015. TopBuild Corp. was incorporated in 2015 and is headquartered in Daytona Beach, Florida.

About Dream Finders Homes

Dream Finders Homes, Inc. operates as a holding company for Dream Finders Holdings LLC that engages in homebuilding business in the United States. It designs, constructs, and sells single-family entry-level, and first-time and second time move-up homes in Charlotte, Raleigh, Jacksonville, Orlando, Denver, the Washington D.C. metropolitan area, Austin, Dallas, and Houston. The company also operates as a licensed home mortgage broker that underwrites, originates, and sells mortgages to Prime Lending; and provides insurance agency services, including closing, escrow, and title insurance, as well as mortgage banking solutions. It sells its homes through its sales representatives and independent real estate brokers. The company was founded in 2008 and is headquartered in Jacksonville, Florida.