Sekisui House (OTCMKTS:SKHSY) and Meritage Homes (NYSE:MTH) Critical Comparison

Sekisui House (OTCMKTS:SKHSY) and Meritage Homes (NYSE:MTH) are both construction companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, profitability, earnings, analyst recommendations, institutional ownership, dividends and valuation.

Dividends

Sekisui House pays an annual dividend of $0.73 per share and has a dividend yield of 3.4%. Meritage Homes pays an annual dividend of $1.72 per share and has a dividend yield of 2.5%. Sekisui House pays out 35.8% of its earnings in the form of a dividend. Meritage Homes pays out 15.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Meritage Homes has increased its dividend for 2 consecutive years.

Earnings & Valuation

This table compares Sekisui House and Meritage Homes”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sekisui House	$26.67 billion	0.54	$1.44 billion	$2.04	10.61
Meritage Homes	$6.22 billion	0.80	$786.19 million	$11.12	6.30

Sekisui House has higher revenue and earnings than Meritage Homes. Meritage Homes is trading at a lower price-to-earnings ratio than Sekisui House, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

0.0% of Sekisui House shares are owned by institutional investors. Comparatively, 98.4% of Meritage Homes shares are owned by institutional investors. 2.2% of Meritage Homes shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for Sekisui House and Meritage Homes, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sekisui House	0	1	0	0	2.00
Meritage Homes	0	8	3	1	2.42

Meritage Homes has a consensus price target of $84.86, indicating a potential upside of 21.12%. Given Meritage Homes’ stronger consensus rating and higher probable upside, analysts clearly believe Meritage Homes is more favorable than Sekisui House.

Volatility and Risk

Sekisui House has a beta of 0.51, indicating that its share price is 49% less volatile than the S&P 500. Comparatively, Meritage Homes has a beta of 1.42, indicating that its share price is 42% more volatile than the S&P 500.

Profitability

This table compares Sekisui House and Meritage Homes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sekisui House	4.67%	10.07%	4.16%
Meritage Homes	10.27%	12.37%	8.59%

Summary

Meritage Homes beats Sekisui House on 14 of the 18 factors compared between the two stocks.

About Sekisui House

Sekisui House, Ltd. designs, constructs, and contracts built-to-order detached houses in Japan and internationally. The company operates through Custom Detached Houses, Rental Housing, Architectural/Civil Engineering, Remodeling, Real Estate Management Fees, Houses For Sale, Condominiums, Urban Redevelopment, and Overseas segments. It also engages in contracting of design and construction of custom detached houses, rental housing, office building, commercial buildings, and other properties; construction of reinforced concrete rental housing and commercial buildings; contracting of design and construction of civil engineering works; remodeling and renovation of houses; subleasing, management, operation, and brokerage of real estate; sale of houses and residential land; and sales of condominiums. Sekisui House, Ltd. was incorporated in 1929 and is headquartered in Osaka, Japan.

About Meritage Homes

Meritage Homes Corporation, together with its subsidiaries, designs and builds single-family attached and detached homes in the United States. The company operates through two segments, Homebuilding and Financial Services. It acquires and develops land; and constructs, markets, and sells homes for entry-level and first move-up buyers in Arizona, California, Colorado, Utah, Texas, Florida, Georgia, North Carolina, South Carolina, and Tennessee. The company also offers title and escrow, mortgage, insurance, and closing/settlement services to its homebuyers. Meritage Homes Corporation was founded in 1985 and is based in Scottsdale, Arizona.