Reviewing Meritage Homes (NYSE:MTH) and Sony (NYSE:SONY)

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

Institutional & Insider Ownership

14.1% of Sony shares are owned by institutional investors. Comparatively, 98.4% of Meritage Homes shares are owned by institutional investors. 7.0% of Sony shares are owned by company insiders. Comparatively, 2.5% of Meritage Homes shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sony	-2.00%	13.06%	5.22%
Meritage Homes	6.11%	7.13%	4.83%

Dividends

Sony pays an annual dividend of $0.11 per share and has a dividend yield of 0.5%. Meritage Homes pays an annual dividend of $1.92 per share and has a dividend yield of 3.0%. Sony pays out 9.8% of its earnings in the form of a dividend. Meritage Homes pays out 40.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Meritage Homes has increased its dividend for 2 consecutive years. Meritage Homes is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current ratings and price targets for Sony and Meritage Homes, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sony	1	1	4	1	2.71
Meritage Homes	0	8	4	0	2.33

Sony currently has a consensus target price of $22.00, suggesting a potential downside of 6.25%. Meritage Homes has a consensus target price of $78.25, suggesting a potential upside of 23.74%. Given Meritage Homes’ higher possible upside, analysts clearly believe Meritage Homes is more favorable than Sony.

Earnings & Valuation

This table compares Sony and Meritage Homes”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sony	$82.90 billion	1.67	-$2.16 billion	$1.12	20.95
Meritage Homes	$5.86 billion	0.70	$453.01 million	$4.78	13.23

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

Volatility and Risk

Sony has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500. Comparatively, Meritage Homes has a beta of 1.35, suggesting that its share price is 35% more volatile than the S&P 500.

Summary

Sony beats Meritage Homes on 9 of the 17 factors compared between the two stocks.

About Sony

Sony Group Corporation designs, develops, produces, and sells electronic equipment, instruments, and devices for the consumer, professional, and industrial markets in Japan, the United States, Europe, China, the Asia-Pacific, and internationally. The company distributes software titles and add-on content through digital networks; network services related to game, video, and music content; and home gaming consoles, packaged and game software, and peripheral devices. It also develops, produces, markets, and distributes recorded music; publishes music; and produces and distributes animation titles, game applications, and various services for music and visual products. In addition, the company produces, acquires, and distributes live-action and animated motion pictures for theatrical release, as well as scripted and animated series, unscripted reality or light entertainment, daytime serials, game shows, television movies, and miniseries and other television programs; operation of television networks and direct-to-consumer streaming services; operates a visual effects and animation unit; and manages a studio facility. Further, it researches, develops, designs, produces, markets, distributes, sells, and services televisions, and video and sound products; interchangeable lens, as well as compact digital, and consumer and professional video cameras; projectors and medical equipment; mobile phones, accessories, and applications; and metal oxide semiconductor image sensors, charge-coupled devices, integration systems, and other semiconductors. Additionally, it offers Internet broadband network services; recording media, and storage media products; and life and non-life insurance, banking, and other services, as well as creates and distributes content for PCs and mobile phones. The company was formerly known as Sony Corporation and changed its name to Sony Group Corporation in April 2021. Sony Group Corporation was incorporated in 1946 and is headquartered in Tokyo, Japan.

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.