Analyzing KB Home (NYSE:KBH) and Gafisa (OTCMKTS:GFASY)

Gafisa (OTCMKTS:GFASY) and KB Home (NYSE:KBH) are both construction companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, valuation, analyst recommendations, dividends, earnings and risk.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Gafisa	N/A	N/A	N/A
KB Home	6.88%	11.40%	6.55%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Gafisa and KB Home, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gafisa	0	0	0	0	0.00
KB Home	2	10	2	1	2.13

KB Home has a consensus price target of $63.82, indicating a potential upside of 13.19%. Given KB Home’s stronger consensus rating and higher probable upside, analysts clearly believe KB Home is more favorable than Gafisa.

Institutional & Insider Ownership

96.1% of KB Home shares are held by institutional investors. 3.1% of Gafisa shares are held by insiders. Comparatively, 3.9% of KB Home shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Gafisa and KB Home”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gafisa	N/A	N/A	N/A	N/A	N/A
KB Home	$6.24 billion	0.59	$428.79 million	$4.91	11.48

KB Home has higher revenue and earnings than Gafisa.

Risk and Volatility

Gafisa has a beta of 0.46, suggesting that its stock price is 54% less volatile than the S&P 500. Comparatively, KB Home has a beta of 1.44, suggesting that its stock price is 44% more volatile than the S&P 500.

Summary

KB Home beats Gafisa on 11 of the 11 factors compared between the two stocks.

About Gafisa

Gafisa S.A. operates as a development and construction company under the Gafisa brand name in Brazil. The company is involved in residential, commercial, and hotel projects. It also provides technical consultancy services, and real estate management and construction services to third parties. Gafisa S.A. was founded in 1954 and is headquartered in São Paulo, Brazil.

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.