Analyzing NVR (NVR) & New Home (NWHM)

NVR (NYSE: NVR) and New Home (NYSE:NWHM) are both construction companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.

Profitability

This table compares NVR and New Home’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NVR 9.36% 42.40% 22.48%
New Home 2.09% 7.69% 3.09%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for NVR and New Home, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NVR 0 3 2 0 2.40
New Home 0 2 0 0 2.00

NVR currently has a consensus price target of $3,013.33, indicating a potential upside of 0.76%. New Home has a consensus price target of $13.00, indicating a potential upside of 28.84%. Given New Home’s higher probable upside, analysts plainly believe New Home is more favorable than NVR.

Institutional & Insider Ownership

78.4% of NVR shares are owned by institutional investors. Comparatively, 59.0% of New Home shares are owned by institutional investors. 11.3% of NVR shares are owned by insiders. Comparatively, 24.6% of New Home shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares NVR and New Home’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NVR $6.18 billion 1.75 $537.52 million $141.56 21.13
New Home $751.17 million 0.28 $17.15 million $0.97 10.40

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

Risk & Volatility

NVR has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500. Comparatively, New Home has a beta of 1.63, meaning that its share price is 63% more volatile than the S&P 500.

Summary

NVR beats New Home on 11 of the 14 factors compared between the two stocks.

NVR Company Profile

NVR, Inc. operates as a homebuilder in the United States. The company operates through four segments: Mid Atlantic, North East, Mid East, and South East. It primarily constructs and sells single-family detached homes, townhomes, and condominium buildings under the Ryan Homes, NVHomes, and Heartland Homes names. The company markets its Ryan Homes products to first-time and first-time move-up buyers; and NVHomes and Heartland Homes products to move-up and luxury buyers. It also provides various mortgage related services to its homebuilding customers through its mortgage banking operations; provides title insurance; and performs title searches in connection with mortgage loan closings. The company was founded in 1979 and is headquartered in Reston, Virginia.

New Home Company Profile

The New Home Company Inc., a homebuilder, focuses on the design, construction, and sale of homes. The company operates in two segments, Homebuilding and Fee Building. It builds and sells homes in metropolitan areas of California and Arizona, including coastal Southern California, the San Francisco Bay area, metro Sacramento, and the greater Phoenix area. The company also offers general contracting services to build homes for independent third-party property owners. The New Home Company Inc. was founded in 2009 and is headquartered in Aliso Viejo, California.

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