Comparing Toll Brothers (NYSE:TOL) & M/I Homes (MHO)

Toll Brothers (NYSE: TOL) and M/I Homes (NYSE:MHO) are both construction companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, valuation, dividends, earnings, risk, analyst recommendations and institutional ownership.

Analyst Recommendations

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This is a summary of recent ratings and recommmendations for Toll Brothers and M/I Homes, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Toll Brothers 1 5 11 0 2.59
M/I Homes 0 0 2 0 3.00

Toll Brothers currently has a consensus target price of $50.80, suggesting a potential upside of 22.29%. M/I Homes has a consensus target price of $39.50, suggesting a potential upside of 19.99%. Given Toll Brothers’ higher probable upside, research analysts clearly believe Toll Brothers is more favorable than M/I Homes.

Dividends

Toll Brothers pays an annual dividend of $0.44 per share and has a dividend yield of 1.1%. M/I Homes does not pay a dividend. Toll Brothers pays out 13.9% of its earnings in the form of a dividend.

Insider and Institutional Ownership

86.0% of Toll Brothers shares are owned by institutional investors. Comparatively, 97.8% of M/I Homes shares are owned by institutional investors. 8.8% of Toll Brothers shares are owned by insiders. Comparatively, 3.9% of M/I Homes shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Toll Brothers has a beta of 1.38, suggesting that its share price is 38% more volatile than the S&P 500. Comparatively, M/I Homes has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500.

Profitability

This table compares Toll Brothers and M/I Homes’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Toll Brothers 9.84% 12.58% 5.80%
M/I Homes 3.56% 12.66% 5.06%

Earnings & Valuation

This table compares Toll Brothers and M/I Homes’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Toll Brothers $5.82 billion 1.10 $535.49 million $3.17 13.10
M/I Homes $1.96 billion 0.47 $72.08 million $2.88 11.43

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

Summary

Toll Brothers beats M/I Homes on 12 of the 16 factors compared between the two stocks.

About Toll Brothers

Toll Brothers, Inc., together with its subsidiaries, designs, builds, markets, and arranges finance for detached and attached homes in luxury residential communities in the United States. The company operates through two segments, Traditional Home Building and City Living. It also builds and sells homes in urban infill markets through Toll Brothers City Living. In addition, the company develops, owns, and operates golf courses and country clubs; develops and sells land to other builders; and develops, operates, and rents apartments. Further, it owns and operates architectural, engineering, mortgage, title, landscaping, security monitoring, lumber distribution, house component assembly, and manufacturing operations. The company serves move-up, empty-nester, active-adult, and second-home buyers. Toll Brothers, Inc. was founded in 1967 and is headquartered in Horsham, Pennsylvania.

About M/I Homes

M/I Homes, Inc., together with its subsidiaries, operates as a builder of single-family homes in Ohio, Indiana, Illinois, Minnesota, Maryland, Virginia, North Carolina, Florida, and Texas, the United States. The company operates through Midwest Homebuilding, Southern Homebuilding, Mid-Atlantic Homebuilding, and Financial Services segments. It designs, constructs, markets, and sells single-family homes and attached townhomes to first-time, move-up, empty-nester, and luxury buyers under the M/I Homes and Showcase Collection brand names. The company also purchases undeveloped land to develop into developed lots for the construction of single-family homes, as well as for sale to others. In addition, it originates and sells mortgages; and serves as a title insurance agent by providing title insurance policies, examination, and closing services to purchasers of its homes. The company was formerly known as M/I Schottenstein Homes, Inc. and changed its name to M/I Homes, Inc. in January 2004. M/I Homes, Inc. was incorporated in 1973 and is based in Columbus, Ohio.

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