Head to Head Comparison: Meritage Homes (MTH) and AV Homes (AVHI)

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Meritage Homes (NYSE: MTH) and AV Homes (NASDAQ:AVHI) are both small-cap construction companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, valuation, risk, profitability, analyst recommendations, earnings and institutional ownership.

Institutional & Insider Ownership

93.1% of Meritage Homes shares are held by institutional investors. Comparatively, 86.4% of AV Homes shares are held by institutional investors. 5.5% of Meritage Homes shares are held by company insiders. Comparatively, 7.7% of AV Homes shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Meritage Homes and AV Homes’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Meritage Homes $3.23 billion 0.58 $143.25 million $3.88 11.86
AV Homes $843.25 million 0.57 -$21.93 million $0.74 29.12

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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Meritage Homes and AV Homes, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Meritage Homes 0 5 6 0 2.55
AV Homes 0 1 0 0 2.00

Meritage Homes currently has a consensus price target of $51.70, indicating a potential upside of 12.39%. Given Meritage Homes’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Meritage Homes is more favorable than AV Homes.

Volatility & Risk

Meritage Homes has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500. Comparatively, AV Homes has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Meritage Homes 4.96% 11.76% 5.63%
AV Homes -3.18% 1.73% 0.72%

Summary

Meritage Homes beats AV Homes on 12 of the 14 factors compared between the two stocks.

Meritage Homes Company Profile

Meritage Homes Corporation designs and builds single-family 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 various homebuyers, including first-time, move-up, active-adult, and luxury homes under the Meritage Homes brand name. The company also provides warranty and customer services; and insurance and closing/settlement services for its homebuyers. It builds and sells homes in Texas, Arizona, California, Colorado, Florida, North Carolina, South Carolina, Georgia, and Tennessee. Meritage Homes Corporation was founded in 1985 and is based in Scottsdale, Arizona.

AV Homes Company Profile

AV Homes, Inc. engages in the homebuilding and community development businesses in Florida, the Carolinas, Arizona, and Texas markets. The company is involved in the acquisition, development, and building of active adult communities, which are age-restricted to the age 55 and over active adult demographic; and primary residential home communities under local Savvy Homes, Bonterra Builders, Royal Oak Homes, and Oakdale-Hampton brands for first-time and move-up buyers. It also engages in the construction and sale of residences within the communities. In addition, the company is involved in other real estate activities, such as the operation of amenities; and the sale of land for third-party development. As of December 31, 2017, it owned 4,911 developed residential lots; 2,395 partially developed residential lots; 8,776 undeveloped residential lots; and 6,980 acres of mixed-use, commercial, and industrial land. The company was formerly known as Avatar Holdings Inc. and changed its name to AV Homes, Inc. in February 2012. AV Homes, Inc. was founded in 1970 and is headquartered in Scottsdale, Arizona.

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