Analyzing Century Communities (CCS) and Meritage Homes (MTH)

Century Communities (NYSE: MTH) and Meritage Homes (NYSE:MTH) are both small-cap construction companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, risk, earnings, dividends and institutional ownership.

Analyst Ratings

This is a breakdown of current recommendations for Century Communities and Meritage Homes, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Century Communities 0 1 5 0 2.83
Meritage Homes 0 5 6 0 2.55



Century Communities presently has a consensus price target of $38.30, indicating a potential upside of 29.17%. Meritage Homes has a consensus price target of $54.00, indicating a potential upside of 30.43%. Given Meritage Homes’ higher probable upside, analysts clearly believe Meritage Homes is more favorable than Century Communities.

Volatility and Risk

Century Communities has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500. Comparatively, Meritage Homes has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500.

Profitability

This table compares Century Communities and Meritage Homes’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Century Communities 4.36% 14.40% 5.99%
Meritage Homes 5.21% 12.17% 5.91%

Institutional and Insider Ownership

79.3% of Century Communities shares are held by institutional investors. Comparatively, 93.9% of Meritage Homes shares are held by institutional investors. 13.9% of Century Communities shares are held by company insiders. Comparatively, 5.5% of Meritage Homes shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Century Communities and Meritage Homes’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Century Communities $1.41 billion 0.63 $50.29 million $2.87 10.33
Meritage Homes $3.23 billion 0.52 $143.25 million $3.88 10.67

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

Summary

Meritage Homes beats Century Communities on 9 of the 14 factors compared between the two stocks.

About Century Communities

Century Communities, Inc. engages in the development, design, construction, marketing, and sale of single-family attached and detached homes in metropolitan areas in California, Colorado, Georgia, Nevada, North Carolina, South Carolina, Tennessee, Texas, Utah, and Washington. It is also involved in the entitlement and development of the underlying land; and the provision of mortgage services and title services to its home buyers. The company sells homes through its sales representatives, as well as through independent real estate brokers. Century Communities, Inc. was founded in 2000 and is headquartered in Greenwood Village, Colorado.

About Meritage Homes

Meritage Homes Corporation designs and builds single-family 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 various homebuyers, including first-time, move-up, active-adult, and luxury homes under the Meritage Homes brand name. The company also provides warranty and customer services; and insurance and closing/settlement services for its homebuyers. It builds and sells homes in Texas, Arizona, California, Colorado, Florida, North Carolina, South Carolina, Georgia, and Tennessee. Meritage Homes Corporation was founded in 1985 and is based in Scottsdale, Arizona.

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