LGI Homes (NASDAQ:LGIH) & Lennar (NYSE:LEN) Financial Contrast

Lennar (NYSE:LEN) and LGI Homes (NASDAQ:LGIH) are both consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.

Institutional and Insider Ownership

81.1% of Lennar shares are owned by institutional investors. Comparatively, 84.9% of LGI Homes shares are owned by institutional investors. 10.1% of Lennar shares are owned by insiders. Comparatively, 12.6% of LGI Homes shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Lennar and LGI Homes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lennar	4.09%	6.15%	4.00%
LGI Homes	4.05%	3.75%	2.02%

Earnings and Valuation

This table compares Lennar and LGI Homes”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lennar	$34.19 billion	0.62	$2.08 billion	$5.29	16.77
LGI Homes	$1.71 billion	0.62	$72.55 million	$3.05	14.94

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

Analyst Recommendations

This is a breakdown of recent ratings for Lennar and LGI Homes, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lennar	11	7	1	0	1.47
LGI Homes	2	1	2	0	2.00

Lennar currently has a consensus target price of $78.87, indicating a potential downside of 11.12%. LGI Homes has a consensus target price of $68.00, indicating a potential upside of 49.22%. Given LGI Homes’ stronger consensus rating and higher probable upside, analysts plainly believe LGI Homes is more favorable than Lennar.

Risk & Volatility

Lennar has a beta of 1.36, suggesting that its share price is 36% more volatile than the S&P 500. Comparatively, LGI Homes has a beta of 1.88, suggesting that its share price is 88% more volatile than the S&P 500.

About Lennar

Lennar Corporation, together with its subsidiaries, operates as a homebuilder primarily under the Lennar brand in the United States. It operates through Homebuilding East, Homebuilding Central, Homebuilding Texas, Homebuilding West, Financial Services, Multifamily, and Lennar Other segments. The company’s homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development, and sale of residential land; and development, construction, and management of multifamily rental properties. It also offers residential mortgage financing, title, insurance, and closing services for home buyers and others, as well as originates and sells securitization commercial mortgage loans. In addition, the company is involved in the fund investment activity. It primarily serves first-time, move-up, active adult, and luxury homebuyers. Lennar Corporation was founded in 1954 and is based in Miami, Florida.

About LGI Homes

LGI Homes, Inc. designs, constructs, and sells homes. It offers entry-level homes, such as attached and detached homes, and active adult homes under the LGI Homes brand name; and luxury series homes under the Terrata Homes brand name. The company also engages in the wholesale business, which include building and selling homes to large institutions looking to acquire single-family rental properties. It serves customers in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada, West Virginia, Virginia, Pennsylvania, Maryland, and Utah. LGI Homes, Inc. was founded in 2003 and is headquartered in The Woodlands, Texas.