Dorel Industries (OTCMKTS:DIIBF) versus Meritage Homes (NYSE:MTH) Critical Contrast

Meritage Homes (NYSE:MTH) and Dorel Industries (OTCMKTS:DIIBF) are both consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, risk, valuation, profitability and institutional ownership.

Earnings and Valuation

This table compares Meritage Homes and Dorel Industries”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Meritage Homes	$5.86 billion	0.65	$453.01 million	$4.78	12.18
Dorel Industries	$1.19 billion	0.03	-$142.22 million	($4.16)	-0.24

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

Profitability

This table compares Meritage Homes and Dorel Industries’ 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%
Dorel Industries	-12.73%	N/A	-11.89%

Insider & Institutional Ownership

98.4% of Meritage Homes shares are owned by institutional investors. 2.5% of Meritage Homes shares are owned by insiders. Comparatively, 19.3% of Dorel Industries shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Meritage Homes has a beta of 1.33, indicating that its stock price is 33% more volatile than the S&P 500. Comparatively, Dorel Industries has a beta of 1.63, indicating that its stock price is 63% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for Meritage Homes and Dorel Industries, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meritage Homes	2	7	4	0	2.15
Dorel Industries	0	1	0	0	2.00

Meritage Homes presently has a consensus price target of $73.56, suggesting a potential upside of 26.32%. Given Meritage Homes’ stronger consensus rating and higher possible upside, analysts clearly believe Meritage Homes is more favorable than Dorel Industries.

Summary

Meritage Homes beats Dorel Industries on 11 of the 13 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 Dorel Industries

Dorel Industries Inc. engages in the design, manufacture, sourcing, marketing, and distribution of home and juvenile products worldwide. The company operates through Dorel Home and Dorel Juvenile segments. The Dorel Home segment offers ready-to assemble furniture and home furnishings products, including metal folding furniture, futons, children's furniture, step stools, hand trucks, ladders, outdoor furniture, and other imported furniture items. This segment markets its products under the DHP, Signature Sleep, Little Seeds, Ameriwood Home, Cosco Home & Office, Queer Eye, Cosmo Living, Novogratz, Real Rooms, Mr. Kate, Baby Relax, Alphason, Bertini, Ntense, and Notio brands. The Dorel Juvenile segment provides children's accessories comprising infant car seats, strollers, home equipment, toys, infant health, and safety aids under the Maxi-Cosi, Tiny Love, Infanti, Safety 1st, Bébé Confort, Quinny, and Cosco brands. The company was formerly known as Dorel Co. Ltd. and changed its name to Dorel Industries Inc. in May 1987. Dorel Industries Inc. was incorporated in 1962 and is headquartered in Westmount, Canada.