Analyzing PulteGroup (NYSE:PHM) and Hooker Furnishings (NASDAQ:HOFT)

Hooker Furnishings (NASDAQ:HOFT) and PulteGroup (NYSE:PHM) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their profitability, valuation, dividends, earnings, analyst recommendations, institutional ownership and risk.

Profitability

This table compares Hooker Furnishings and PulteGroup’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hooker Furnishings	-7.90%	1.61%	1.17%
PulteGroup	11.62%	15.21%	10.89%

Insider and Institutional Ownership

73.6% of Hooker Furnishings shares are owned by institutional investors. Comparatively, 89.9% of PulteGroup shares are owned by institutional investors. 2.7% of Hooker Furnishings shares are owned by company insiders. Comparatively, 0.7% of PulteGroup shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Hooker Furnishings and PulteGroup”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hooker Furnishings	$278.14 million	0.51	-$26.97 million	($2.15)	-6.10
PulteGroup	$17.31 billion	1.35	$2.22 billion	$9.79	12.74

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

Volatility & Risk

Hooker Furnishings has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500. Comparatively, PulteGroup has a beta of 1.19, indicating that its stock price is 19% more volatile than the S&P 500.

Dividends

Hooker Furnishings pays an annual dividend of $0.46 per share and has a dividend yield of 3.5%. PulteGroup pays an annual dividend of $1.04 per share and has a dividend yield of 0.8%. Hooker Furnishings pays out -21.4% of its earnings in the form of a dividend. PulteGroup pays out 10.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Hooker Furnishings has increased its dividend for 9 consecutive years and PulteGroup has increased its dividend for 7 consecutive years. Hooker Furnishings is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current recommendations for Hooker Furnishings and PulteGroup, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hooker Furnishings	1	1	0	0	1.50
PulteGroup	0	5	13	0	2.72

PulteGroup has a consensus price target of $142.20, suggesting a potential upside of 14.05%. Given PulteGroup’s stronger consensus rating and higher probable upside, analysts clearly believe PulteGroup is more favorable than Hooker Furnishings.

Summary

PulteGroup beats Hooker Furnishings on 13 of the 17 factors compared between the two stocks.

About Hooker Furnishings

Hooker Furnishings Corporation designs, manufactures, imports, and markets residential household, hospitality, and contract furniture. It operates in three segments: Hooker Branded, Home Meridian, and Domestic Upholstery. The Hooker Branded segment offers design categories, including home entertainment, home office, accent, dining, and bedroom furniture under the Hooker Furniture brand; and imported upholstered furniture under the Hooker Upholstery brand. The Home Meridian segment provides home furnishings under the Accentrics Home brand; a range of bedroom, dining room, accent, display cabinet, home office, and youth furnishings under the Pulaski Furniture and Samuel Lawrence Furniture brands; and imported leather motion upholstery under the Prime Resources International brand. This segment also designs and supplies hotel furnishings for four and five-star hotels under the Samuel Lawrence Hospitality brand name. The Domestic Upholstery segment offers motion and stationary leather furniture under the Bradington-Young brand; chairs, sofas, sectionals, recliners, and a variety of accent upholstery pieces under the HF Custom brand; and upholstered furniture, such as private label sectionals, modulars, sofas, chairs, ottomans, benches, beds, and dining chairs for lifestyle specialty retailers under the Shenandoah Furniture brand. This segment also designs and manufactures outdoor furniture under the Sunset West brand. The company supplies upholstered seating and casegoods to upscale senior living and assisted living facilities through designers, design firms, industry dealers, and distributors under the H Contract brand; and interior designer products under the Lifestyle Brands name; and lighting, accessories, and home décor products under the BOBO Intriguing Objects brand. It sells home furnishing products through retailers, such as independent furniture stores, department stores, mass merchants, national chains, catalog merchants, interior designers, and e-commerce retailers primarily in North America. Hooker Furnishings Corporation was incorporated in 1924 and is headquartered in Martinsville, Virginia.

About PulteGroup

PulteGroup, Inc., through its subsidiaries, primarily engages in the homebuilding business in the United States. It acquires and develops land primarily for residential purposes; and constructs housing on such land. The company also offers various home designs, including single-family detached, townhomes, condominiums, and duplexes under the Centex, Pulte Homes, Del Webb, DiVosta Homes, John Wieland Homes and Neighborhoods, and American West brand names. In addition, the company arranges financing through the origination of mortgage loans primarily for homebuyers; sells the servicing rights for the originated loans; and provides title insurance policies, and examination and closing services to homebuyers. PulteGroup, Inc. was founded in 1950 and is headquartered in Atlanta, Georgia.