Analyzing New Home Company Inc. (The) (NYSE:NWHM) and Toll Brothers (TOL)

Toll Brothers (NYSE: TOL) and New Home Company Inc. (The) (NYSE:NWHM) are both construction companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, valuation and dividends.

Profitability

This table compares Toll Brothers and New Home Company Inc. (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Toll Brothers 7.67% 9.71% 4.33%
New Home Company Inc. (The) 2.82% 10.25% 4.74%

Risk and Volatility

Toll Brothers has a beta of 1.52, indicating that its stock price is 52% more volatile than the S&P 500. Comparatively, New Home Company Inc. (The) has a beta of 1.87, indicating that its stock price is 87% more volatile than the S&P 500.

Valuation and Earnings

This table compares Toll Brothers and New Home Company Inc. (The)’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Toll Brothers $5.41 billion 1.15 $507.09 million $2.43 15.70
New Home Company Inc. (The) $769.49 million 0.28 $36.07 million $1.04 10.08

Toll Brothers has higher revenue and earnings than New Home Company Inc. (The). New Home Company Inc. (The) is trading at a lower price-to-earnings ratio than Toll Brothers, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

80.3% of Toll Brothers shares are held by institutional investors. Comparatively, 58.8% of New Home Company Inc. (The) shares are held by institutional investors. 8.8% of Toll Brothers shares are held by insiders. Comparatively, 24.2% of New Home Company Inc. (The) shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for Toll Brothers and New Home Company Inc. (The), as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Toll Brothers 1 6 8 0 2.47
New Home Company Inc. (The) 0 0 0 0 N/A

Toll Brothers presently has a consensus target price of $39.27, suggesting a potential upside of 2.94%. Given Toll Brothers’ higher probable upside, research analysts plainly believe Toll Brothers is more favorable than New Home Company Inc. (The).

Dividends

Toll Brothers pays an annual dividend of $0.32 per share and has a dividend yield of 0.8%. New Home Company Inc. (The) does not pay a dividend. Toll Brothers pays out 13.2% of its earnings in the form of a dividend.

Summary

Toll Brothers beats New Home Company Inc. (The) on 10 of the 15 factors compared between the two stocks.

Toll Brothers Company Profile

Toll Brothers, Inc. is engaged in designing, building, marketing, selling and arranging financing for detached and attached homes in luxury residential communities. The Company operates through two segments: Traditional Home Building and Toll Brothers City Living (City Living). Within the Traditional Home Building segment, it operates in five geographic segments in the United States: the North, consisting of Connecticut, Illinois, Massachusetts, Michigan, Minnesota, New Jersey and New York; the Mid-Atlantic, consisting of Delaware, Maryland, Pennsylvania and Virginia; the South, consisting of Florida, North Carolina and Texas; the West, consisting of Arizona, Colorado, Nevada and Washington, and California. City Living is the Company’s urban development division. Its products include Traditional Home Building Product and City Living Product. Its Traditional Home Building Product includes detached homes, move-up, executive, estate, and active-adult and age-qualified lines of home.

New Home Company Inc. (The) Company Profile

The New Home Company Inc. is a homebuilding company. The Company focuses on the design, construction and sale of consumer-driven homes in various metropolitan areas within certain markets in California and Arizona, including coastal Southern California, the San Francisco Bay area, metro Sacramento and the greater Phoenix area. The Company’s segments include homebuilding and fee building. The homebuilding operations consist of divisions in Northern California, Southern California and its division in Arizona, which is established through the purchase of lots in an unconsolidated joint venture. The Company is focused on building and selling homes for its own account. It is focused on identifying sites and creating communities that allow it to design, construct and sell consumer-driven single-family detached and attached homes in major metropolitan areas in coastal Southern California, the San Francisco Bay area, metro Sacramento and the greater Phoenix area.

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