Critical Review: Century Communities (NYSE:CCS) & Smith Douglas Homes (NYSE:SDHC)

Smith Douglas Homes (NYSE:SDHC) and Century Communities (NYSE:CCS) are both small-cap consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, institutional ownership, risk, analyst recommendations and profitability.

Valuation and Earnings

This table compares Smith Douglas Homes and Century Communities”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Smith Douglas Homes	$971.12 million	0.48	$10.69 million	$0.55	16.73
Century Communities	$3.81 billion	0.39	$147.60 million	$3.75	13.96

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

Institutional & Insider Ownership

99.5% of Century Communities shares are held by institutional investors. 84.2% of Smith Douglas Homes shares are held by company insiders. Comparatively, 13.7% of Century Communities shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

Smith Douglas Homes has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, Century Communities has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Smith Douglas Homes	0.49%	0.61%	0.45%
Century Communities	2.86%	5.41%	3.01%

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Smith Douglas Homes	1	7	1	0	2.00
Century Communities	3	2	2	0	1.86

Smith Douglas Homes currently has a consensus price target of $11.38, suggesting a potential upside of 23.64%. Century Communities has a consensus price target of $63.00, suggesting a potential upside of 20.36%. Given Smith Douglas Homes’ stronger consensus rating and higher probable upside, analysts plainly believe Smith Douglas Homes is more favorable than Century Communities.

Summary

Century Communities beats Smith Douglas Homes on 9 of the 14 factors compared between the two stocks.

About Smith Douglas Homes

Smith Douglas Homes is a residential homebuilder focused on designing, constructing and selling single-family homes. The company primarily serves buyers seeking attainable homes and offers a range of floor plans and options across its communities. Founded in 2008, Smith Douglas Homes is based in Woodstock, Georgia, and operates in markets across the Southeastern United States, including communities in Georgia, Alabama and Tennessee. The company develops residential communities and sells homes to individual buyers, coordinating the building process from site development through construction and closing.

About Century Communities

Century Communities, Inc. is a U.S. homebuilder that designs, constructs, markets and sells single-family homes and townhomes. The company offers homes at a range of price points and sells them through its Century Communities and Century Complete brands. Founded in 2002, the company operates in markets across the United States. Its related services include mortgage lending and title services, which support customers through the home-buying process. Co-founder Robert J. Francescon serves as the company’s chief executive officer.