Head-To-Head Comparison: Sony (NYSE:SONY) vs. Meritage Homes (NYSE:MTH)

Meritage Homes (NYSE:MTH) and Sony (NYSE:SONY) are both consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, valuation, analyst recommendations and dividends.

Insider and Institutional Ownership

98.4% of Meritage Homes shares are owned by institutional investors. Comparatively, 14.1% of Sony shares are owned by institutional investors. 2.5% of Meritage Homes shares are owned by insiders. Comparatively, 7.0% of Sony shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

Meritage Homes has a beta of 1.35, indicating that its stock price is 35% more volatile than the S&P 500. Comparatively, Sony has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500.

Profitability

This table compares Meritage Homes and Sony’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Meritage Homes	6.11%	7.13%	4.83%
Sony	-2.00%	13.06%	5.22%

Dividends

Meritage Homes pays an annual dividend of $1.92 per share and has a dividend yield of 3.0%. Sony pays an annual dividend of $0.11 per share and has a dividend yield of 0.5%. Meritage Homes pays out 40.2% of its earnings in the form of a dividend. Sony pays out 9.8% 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. Meritage Homes has raised its dividend for 2 consecutive years. Meritage Homes is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings for Meritage Homes and Sony, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meritage Homes	0	8	4	0	2.33
Sony	1	1	4	1	2.71

Meritage Homes currently has a consensus price target of $78.25, indicating a potential upside of 23.74%. Sony has a consensus price target of $22.00, indicating a potential downside of 6.25%. Given Meritage Homes’ higher possible upside, analysts plainly believe Meritage Homes is more favorable than Sony.

Earnings and Valuation

This table compares Meritage Homes and Sony”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Meritage Homes	$5.86 billion	0.70	$453.01 million	$4.78	13.23
Sony	$82.90 billion	1.67	-$2.16 billion	$1.12	20.95

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

Summary

Sony beats Meritage Homes on 9 of the 17 factors compared between the two stocks.

About Meritage Homes

Meritage Homes Corporation, together with its subsidiaries, designs and builds single-family attached and detached homes in the United States. The company operates through two segments, Homebuilding and Financial Services. It acquires and develops land; and constructs, markets, and sells homes for entry-level and first move-up buyers in Arizona, California, Colorado, Utah, Texas, Florida, Georgia, North Carolina, South Carolina, and Tennessee. The company also offers title and escrow, mortgage, insurance, and closing/settlement services to its homebuyers. Meritage Homes Corporation was founded in 1985 and is based in Scottsdale, Arizona.

About Sony

Sony Group Corporation designs, develops, produces, and sells electronic equipment, instruments, and devices for the consumer, professional, and industrial markets in Japan, the United States, Europe, China, the Asia-Pacific, and internationally. The company distributes software titles and add-on content through digital networks; network services related to game, video, and music content; and home gaming consoles, packaged and game software, and peripheral devices. It also develops, produces, markets, and distributes recorded music; publishes music; and produces and distributes animation titles, game applications, and various services for music and visual products. In addition, the company produces, acquires, and distributes live-action and animated motion pictures for theatrical release, as well as scripted and animated series, unscripted reality or light entertainment, daytime serials, game shows, television movies, and miniseries and other television programs; operation of television networks and direct-to-consumer streaming services; operates a visual effects and animation unit; and manages a studio facility. Further, it researches, develops, designs, produces, markets, distributes, sells, and services televisions, and video and sound products; interchangeable lens, as well as compact digital, and consumer and professional video cameras; projectors and medical equipment; mobile phones, accessories, and applications; and metal oxide semiconductor image sensors, charge-coupled devices, integration systems, and other semiconductors. Additionally, it offers Internet broadband network services; recording media, and storage media products; and life and non-life insurance, banking, and other services, as well as creates and distributes content for PCs and mobile phones. The company was formerly known as Sony Corporation and changed its name to Sony Group Corporation in April 2021. Sony Group Corporation was incorporated in 1946 and is headquartered in Tokyo, Japan.