Critical Survey: American Realty Investors (NYSE:ARL) and Legacy Housing (NASDAQ:LEGH)

Legacy Housing (NASDAQ:LEGH) and American Realty Investors (NYSE:ARL) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, profitability, risk, institutional ownership and earnings.

Risk & Volatility

Legacy Housing has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500. Comparatively, American Realty Investors has a beta of 0.74, indicating that its stock price is 26% less volatile than the S&P 500.

Profitability

This table compares Legacy Housing and American Realty Investors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Legacy Housing	26.66%	9.47%	8.80%
American Realty Investors	11.74%	0.33%	0.25%

Insider and Institutional Ownership

89.3% of Legacy Housing shares are held by institutional investors. 30.1% of Legacy Housing shares are held by insiders. Comparatively, 90.8% of American Realty Investors shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Legacy Housing and American Realty Investors, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Legacy Housing	0	4	0	0	2.00
American Realty Investors	0	1	0	0	2.00

Legacy Housing currently has a consensus target price of $21.00, suggesting a potential downside of 6.83%. Given Legacy Housing’s higher probable upside, equities research analysts plainly believe Legacy Housing is more favorable than American Realty Investors.

Valuation & Earnings

This table compares Legacy Housing and American Realty Investors”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Legacy Housing	$180.50 million	2.98	$61.64 million	$1.95	11.56
American Realty Investors	$47.32 million	5.66	-$14.70 million	$0.36	46.03

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

Summary

Legacy Housing beats American Realty Investors on 9 of the 12 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 American Realty Investors

American Realty Investors, Inc., together with its subsidiaries, acquires, develops, owns, and manages multifamily and commercial real estate properties in the Southern United States. It operates through two segments, Residential and Commercial. The company leases apartment units to residents; and office, industrial, and retail space to various for-profit businesses, as well as local, state, and federal agencies. It also offers tenant services, including parking and storage space rental; and sells land and properties. The company was incorporated in 1999 and is based in Dallas, Texas. American Realty Investors, Inc. is a subsidiary of Realty Advisors, Inc.