Smith Douglas Homes (NYSE:SDHC) & Meritage Homes (NYSE:MTH) Financial Contrast

Meritage Homes (NYSE:MTH) and Smith Douglas Homes (NYSE:SDHC) are both construction companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, earnings, analyst recommendations, dividends and profitability.

Insider & Institutional Ownership

98.4% of Meritage Homes shares are held by institutional investors. 2.0% of Meritage Homes shares are held by 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 Ratings

This is a breakdown of recent ratings and target prices for Meritage Homes and Smith Douglas Homes, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meritage Homes	1	3	3	0	2.29
Smith Douglas Homes	0	5	1	0	2.17

Meritage Homes presently has a consensus target price of $172.67, suggesting a potential upside of 3.67%. Smith Douglas Homes has a consensus target price of $27.70, suggesting a potential downside of 5.46%. Given Meritage Homes’ stronger consensus rating and higher probable upside, analysts plainly believe Meritage Homes is more favorable than Smith Douglas Homes.

Earnings and Valuation

This table compares Meritage Homes and Smith Douglas Homes’ top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Meritage Homes	$6.14 billion	0.99	$738.75 million	$21.44	7.77
Smith Douglas Homes	$764.63 million	0.34	$123.18 million	N/A	N/A

Meritage Homes has higher revenue and earnings than Smith Douglas Homes.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Meritage Homes	12.54%	17.63%	12.65%
Smith Douglas Homes	N/A	N/A	N/A

Summary

Meritage Homes beats Smith Douglas Homes on 11 of the 11 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 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.