Critical Contrast: Hooker Furnishings (NASDAQ:HOFT) vs. Smith Douglas Homes (NYSE:SDHC)

Hooker Furnishings (NASDAQ:HOFT) and Smith Douglas Homes (NYSE:SDHC) are both small-cap consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, profitability, risk, dividends, institutional ownership and valuation.

Analyst Recommendations

This is a breakdown of recent ratings for Hooker Furnishings and Smith Douglas Homes, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hooker Furnishings	1	1	0	0	1.50
Smith Douglas Homes	1	7	1	0	2.00

Smith Douglas Homes has a consensus target price of $13.62, indicating a potential upside of 34.24%. Given Smith Douglas Homes’ stronger consensus rating and higher possible upside, analysts plainly believe Smith Douglas Homes is more favorable than Hooker Furnishings.

Institutional and Insider Ownership

73.6% of Hooker Furnishings shares are held by institutional investors. 2.7% of Hooker Furnishings shares are held by insiders. Comparatively, 84.2% of Smith Douglas Homes shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Hooker Furnishings and Smith Douglas Homes”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hooker Furnishings	$278.14 million	0.48	-$26.97 million	($1.69)	-7.36
Smith Douglas Homes	$971.12 million	0.53	$10.69 million	$0.72	14.10

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

Profitability

This table compares Hooker Furnishings and Smith Douglas Homes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hooker Furnishings	-6.62%	4.32%	3.20%
Smith Douglas Homes	0.64%	-0.19%	-0.14%

Risk & Volatility

Hooker Furnishings has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500. Comparatively, Smith Douglas Homes has a beta of 0.9, suggesting that its share price is 10% less volatile than the S&P 500.

Summary

Smith Douglas Homes beats Hooker Furnishings on 10 of the 14 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 Smith Douglas Homes

Smith Douglas Homes Corp., together with its subsidiaries, engages in the design, construction, and sale of single-family homes in the southeastern United States. It also provides closing, escrow, and title insurance services. The company sells its products to entry-level and empty-nest homebuyers. Smith Douglas Homes Corp. was founded in 2008 and is headquartered in Woodstock, Georgia.