Toll Brothers (NYSE:TOL) versus Mohawk Industries (NYSE:MHK) Critical Comparison

Mohawk Industries (NYSE:MHK) and Toll Brothers (NYSE:TOL) are both consumer discretionary companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, profitability, institutional ownership, analyst recommendations, valuation, dividends and risk.

Profitability

This table compares Mohawk Industries and Toll Brothers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mohawk Industries	4.15%	7.50%	4.60%
Toll Brothers	11.14%	14.21%	8.24%

Institutional & Insider Ownership

79.0% of Mohawk Industries shares are owned by institutional investors. Comparatively, 91.8% of Toll Brothers shares are owned by institutional investors. 17.9% of Mohawk Industries shares are owned by insiders. Comparatively, 1.4% of Toll Brothers shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Mohawk Industries and Toll Brothers”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mohawk Industries	$10.79 billion	0.84	$369.90 million	$7.55	17.62
Toll Brothers	$10.97 billion	1.27	$1.35 billion	$12.46	11.97

Toll Brothers has higher revenue and earnings than Mohawk Industries. Toll Brothers is trading at a lower price-to-earnings ratio than Mohawk Industries, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Mohawk Industries and Toll Brothers, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mohawk Industries	0	12	3	1	2.31
Toll Brothers	1	4	15	0	2.70

Mohawk Industries currently has a consensus price target of $130.50, suggesting a potential downside of 1.92%. Toll Brothers has a consensus price target of $166.67, suggesting a potential upside of 11.73%. Given Toll Brothers’ stronger consensus rating and higher possible upside, analysts plainly believe Toll Brothers is more favorable than Mohawk Industries.

Risk and Volatility

Mohawk Industries has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500. Comparatively, Toll Brothers has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500.

Summary

Toll Brothers beats Mohawk Industries on 12 of the 15 factors compared between the two stocks.

About Mohawk Industries

Mohawk Industries, Inc. designs, manufactures, sources, distributes, and markets flooring products for residential and commercial remodeling, and new construction channels in the United States, Europe, Latin America, and internationally. It operates through three segments: Global Ceramic, Flooring North America, and Flooring Rest of the World. The company provides ceramic, porcelain, and natural stone tiles products for floor and wall applications; natural stones, porcelain slabs, and quartz countertops, as well as installation materials; floor covering products comprising broadloom carpets, carpet tiles, rugs and mats, carpet pads, laminates, medium-density fiberboards, wood floorings, luxury vinyl tiles, and sheet vinyl; and roofing panels, insulation boards, mezzanine flooring products, medium-density fiberboard, and chipboards. It also licenses its intellectual property to flooring manufacturers. The company sells its products under the American Olean, Daltile, Decortiles, Eliane, EmilGroup, KAI, Kerama Marazzi, Marazzi, Ragno, Aladdin Commercial, Durkan, Foss, IVC, Karastan, Mohawk, Mohawk Group, Mohawk Home, Pergo, Portico, Quick-Step, Feltex, GH Commercial, Godfrey Hirst, Hycraft, IVC Commercial, IVC Home, Lentex, Leoline, and Moduleo, Redbook, Unilin, and Vitromex brands. It offers its products to company-owned service centers and stores, company-operated distributors, floor covering retailers, wholesalers, mass merchandisers, department stores, shop at home, buying groups, ceramic tile specialists, e-commerce retailers, residential builders, independent distributors, commercial contractors, and commercial end users. The company was incorporated in 1988 and is headquartered in Calhoun, Georgia.

About Toll Brothers

Toll Brothers, Inc., together with its subsidiaries, designs, builds, markets, sells, and arranges finance for a range of detached and attached homes in luxury residential communities in the United States. It designs, builds, markets, and sells condominiums through Toll Brothers City Living. The company also develops a range of single-story living and first-floor primary bedroom suite home designs, as well as communities with recreational amenities, such as golf courses, marinas, pool complexes, country clubs, and fitness and recreation centers; and develops, operates, and rents apartments. In addition, it provides various interior fit-out options, such as flooring, wall tile, plumbing, cabinets, fixtures, appliances, lighting, and home-automation and security technologies. Further, the company owns and operates architectural, engineering, mortgage, title, land development, insurance, smart home technology, landscaping, lumber distribution, house component assembly, and component manufacturing operations. It serves luxury first-time, move-up, empty-nester, active-adult, and second-home buyers. Toll Brothers, Inc. was founded in 1967 and is headquartered in Fort Washington, Pennsylvania.