Comparing KB Home (NYSE:KBH) & Legacy Housing (NASDAQ:LEGH)

Legacy Housing (NASDAQ:LEGH) and KB Home (NYSE:KBH) are both consumer discretionary companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.

Valuation & Earnings

This table compares Legacy Housing and KB Home”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Legacy Housing	$179.45 million	3.67	$41.81 million	$2.17	12.75
KB Home	$6.24 billion	0.41	$428.79 million	$3.55	11.83

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

Insider and Institutional Ownership

89.3% of Legacy Housing shares are owned by institutional investors. Comparatively, 96.1% of KB Home shares are owned by institutional investors. 12.7% of Legacy Housing shares are owned by company insiders. Comparatively, 4.7% of KB Home 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.

Analyst Recommendations

This is a breakdown of current recommendations for Legacy Housing and KB Home, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Legacy Housing	0	4	0	0	2.00
KB Home	4	8	4	0	2.00

Legacy Housing currently has a consensus target price of $21.00, suggesting a potential downside of 24.08%. KB Home has a consensus target price of $53.08, suggesting a potential upside of 26.44%. Given KB Home’s higher probable upside, analysts clearly believe KB Home is more favorable than Legacy Housing.

Profitability

This table compares Legacy Housing and KB Home’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Legacy Housing	28.56%	9.53%	8.74%
KB Home	4.39%	6.56%	3.71%

Volatility and Risk

Legacy Housing has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500. Comparatively, KB Home has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500.

Summary

KB Home beats Legacy Housing on 7 of the 13 factors compared between the two stocks.

About Legacy Housing

Legacy Housing Corporation engages in the building, sale, and financing of manufactured homes and tiny houses primarily in the southern United States. It manufactures and provides for the transport of mobile homes, including 1 to 5 bedrooms with 1 to 3 1/2 bathrooms; and provides wholesale financing to dealers and mobile home parks, as well as retail financing to consumers. The company also offers inventory financing for its independent retailers; consumer financing for its products; and financing to manufactured housing community owners that buy or lease its products for use in their rental housing communities. In addition, it involved in financing and developing new manufactured home communities. The company markets its homes under the Legacy brand through a network of independent retailers and company-owned stores; and directly to manufactured home communities. Legacy Housing Corporation was founded in 2005 and is headquartered in Bedford, Texas.

About KB Home

KB Home operates as a homebuilding company in the United States. It operates through four segments: West Coast, Southwest, Central, and Southeast. It builds and sells various homes, including attached and detached single-family residential homes, townhomes, and condominiums primarily for first-time, first move-up, second move-up, and active adult homebuyers. The company also provides financial services, such as insurance products and title services, as well as mortgage banking services, including residential consumer mortgage loans to homebuyers. It has operations in Arizona, California, Colorado, Florida, Idaho, Nevada, North Carolina, Texas, and Washington. The company was formerly known as Kaufman and Broad Home Corporation and changed its name to KB Home in January 2001. KB Home was founded in 1957 and is based in Los Angeles, California.