Critical Review: Gafisa (GFA) vs. The Competition

Gafisa (NYSE: GFA) is one of 65 publicly-traded companies in the “Real Estate Development & Operations” industry, but how does it contrast to its competitors? We will compare Gafisa to similar companies based on the strength of its institutional ownership, risk, valuation, profitability, analyst recommendations, dividends and earnings.

Insider and Institutional Ownership

3.8% of Gafisa shares are owned by institutional investors. Comparatively, 35.8% of shares of all “Real Estate Development & Operations” companies are owned by institutional investors. 41.1% of shares of all “Real Estate Development & Operations” companies are owned 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.

Volatility and Risk

Gafisa has a beta of 1.92, indicating that its share price is 92% more volatile than the S&P 500. Comparatively, Gafisa’s competitors have a beta of 0.82, indicating that their average share price is 18% less volatile than the S&P 500.

Profitability

This table compares Gafisa and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gafisa -195.79% -34.52% -11.97%
Gafisa Competitors -2.29% -0.89% 1.58%

Earnings & Valuation

This table compares Gafisa and its competitors revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Gafisa $263.80 million -$333.60 million -0.50
Gafisa Competitors $438.91 million $33.86 million 847.15

Gafisa’s competitors have higher revenue and earnings than Gafisa. Gafisa is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Analyst Recommendations

This is a breakdown of current ratings for Gafisa and its competitors, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gafisa 2 0 0 0 1.00
Gafisa Competitors 38 227 707 9 2.70

As a group, “Real Estate Development & Operations” companies have a potential upside of 31.05%. Given Gafisa’s competitors stronger consensus rating and higher possible upside, analysts clearly believe Gafisa has less favorable growth aspects than its competitors.

Summary

Gafisa competitors beat Gafisa on 12 of the 13 factors compared.

About Gafisa

Gafisa S.A. is a diversified national homebuilder. The Company’s segments are Gafisa (for ventures targeted at high and medium income) and Tenda (for ventures targeted at low income). The Company’s brands include Tenda, which serves the affordable entry-level housing segments, Gafisa, which offers a range of residential options to the mid to higher income segments and Alphaville (equity method investment), which focuses on the identification, development and sale of residential communities. In addition, it provides construction services to third parties on certain developments in the Gafisa segment where it retains an equity interest. Its real estate business activities include developments for sale of residential units, land subdivisions and commercial buildings; construction services, and sale of units through its brokerage subsidiaries, Gafisa Vendas Intermediacao Imobiliaria Ltda and Gafisa Vendas in Rio de Janeiro, jointly referred to as Gafisa Vendas.

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