Critical Analysis: Persimmon (OTCMKTS:PSMMY) versus D.R. Horton (NYSE:DHI)

Persimmon (OTCMKTS:PSMMY) and D.R. Horton (NYSE:DHI) are both construction companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, valuation, profitability, risk and dividends.

Risk and Volatility

Persimmon has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500. Comparatively, D.R. Horton has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500.

Profitability

This table compares Persimmon and D.R. Horton’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Persimmon	N/A	N/A	N/A
D.R. Horton	11.46%	15.74%	11.07%

Insider and Institutional Ownership

90.6% of D.R. Horton shares are owned by institutional investors. 0.6% of Persimmon shares are owned by insiders. Comparatively, 0.5% of D.R. Horton 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 Persimmon and D.R. Horton”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Persimmon	$4.09 billion	1.16	$341.33 million	N/A	N/A
D.R. Horton	$36.80 billion	1.44	$4.76 billion	$12.47	14.27

D.R. Horton has higher revenue and earnings than Persimmon.

Dividends

Persimmon pays an annual dividend of $2.00 per share and has a dividend yield of 6.8%. D.R. Horton pays an annual dividend of $1.60 per share and has a dividend yield of 0.9%. D.R. Horton pays out 12.8% of its earnings in the form of a dividend. D.R. Horton has increased its dividend for 10 consecutive years.

Analyst Ratings

This is a summary of current ratings and price targets for Persimmon and D.R. Horton, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Persimmon	0	1	2	1	3.00
D.R. Horton	2	6	6	1	2.40

D.R. Horton has a consensus target price of $154.38, indicating a potential downside of 13.24%. Given D.R. Horton’s higher probable upside, analysts plainly believe D.R. Horton is more favorable than Persimmon.

Summary

D.R. Horton beats Persimmon on 11 of the 15 factors compared between the two stocks.

About Persimmon

Persimmon Plc, together with its subsidiaries, operates as a house builder in the United Kingdom. The company offers family housing under the Persimmon Homes brand name; housing under the Charles Church brand name; and social housing under the Westbury Partnerships brand name. It also provides broadband services under the FibreNest brand; and timber frame, insulated wall panels, and roof cassettes under the brand Space4. Further, it offers concrete bricks and roof tile. Persimmon Plc was founded in 1972 and is headquartered in York, the United Kingdom.

About D.R. Horton

D.R. Horton, Inc. operates as a homebuilding company in East, North, Southeast, South Central, Southwest, and Northwest regions in the United States. It engages in the acquisition and development of land; and construction and sale of residential homes in 118 markets across 33 states under the names of D.R. Horton, America’s Builder, Express Homes, Emerald Homes, and Freedom Homes. The company constructs and sells single-family detached homes; and attached homes, such as townhomes, duplexes, and triplexes. It also provides mortgage financing services; and title insurance policies, and examination and closing services, as well as engages in the residential lot development business. In addition, the company develops, constructs, owns, leases, and sells multi-family and single-family rental properties; and owns non-residential real estate, including ranch land and improvements. It primarily serves homebuyers. D.R. Horton, Inc. was founded in 1978 and is headquartered in Arlington, Texas.