Analyzing D.R. Horton (NYSE:DHI) and Sony (NYSE:SONY)

Sony (NYSE:SONY) and D.R. Horton (NYSE:DHI) are both large-cap consumer discretionary companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, earnings, dividends and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Sony and D.R. Horton, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sony	1	1	4	1	2.71
D.R. Horton	0	10	5	0	2.33

Sony currently has a consensus target price of $22.00, indicating a potential downside of 5.15%. D.R. Horton has a consensus target price of $163.83, indicating a potential upside of 16.90%. Given D.R. Horton’s higher possible upside, analysts plainly believe D.R. Horton is more favorable than Sony.

Earnings and Valuation

This table compares Sony and D.R. Horton”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sony	$82.90 billion	1.65	-$2.16 billion	$1.12	20.71
D.R. Horton	$34.25 billion	1.14	$3.59 billion	$10.51	13.33

D.R. Horton has lower revenue, but higher earnings than Sony. D.R. Horton is trading at a lower price-to-earnings ratio than Sony, indicating that it is currently the more affordable of the two stocks.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sony	-2.00%	13.06%	5.22%
D.R. Horton	9.15%	12.47%	8.59%

Dividends

Sony pays an annual dividend of $0.11 per share and has a dividend yield of 0.5%. D.R. Horton pays an annual dividend of $1.80 per share and has a dividend yield of 1.3%. Sony pays out 9.8% of its earnings in the form of a dividend. D.R. Horton pays out 17.1% 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. D.R. Horton has raised its dividend for 10 consecutive years. D.R. Horton is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Sony has a beta of 0.93, indicating that its share price is 7% less volatile than the S&P 500. Comparatively, D.R. Horton has a beta of 1.37, indicating that its share price is 37% more volatile than the S&P 500.

Insider and Institutional Ownership

14.1% of Sony shares are held by institutional investors. Comparatively, 90.6% of D.R. Horton shares are held by institutional investors. 7.0% of Sony shares are held by company insiders. Comparatively, 0.7% of D.R. Horton shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

D.R. Horton beats Sony on 10 of the 18 factors compared between the two stocks.

About Sony

Sony Group Corporation designs, develops, produces, and sells electronic equipment, instruments, and devices for the consumer, professional, and industrial markets in Japan, the United States, Europe, China, the Asia-Pacific, and internationally. The company distributes software titles and add-on content through digital networks; network services related to game, video, and music content; and home gaming consoles, packaged and game software, and peripheral devices. It also develops, produces, markets, and distributes recorded music; publishes music; and produces and distributes animation titles, game applications, and various services for music and visual products. In addition, the company produces, acquires, and distributes live-action and animated motion pictures for theatrical release, as well as scripted and animated series, unscripted reality or light entertainment, daytime serials, game shows, television movies, and miniseries and other television programs; operation of television networks and direct-to-consumer streaming services; operates a visual effects and animation unit; and manages a studio facility. Further, it researches, develops, designs, produces, markets, distributes, sells, and services televisions, and video and sound products; interchangeable lens, as well as compact digital, and consumer and professional video cameras; projectors and medical equipment; mobile phones, accessories, and applications; and metal oxide semiconductor image sensors, charge-coupled devices, integration systems, and other semiconductors. Additionally, it offers Internet broadband network services; recording media, and storage media products; and life and non-life insurance, banking, and other services, as well as creates and distributes content for PCs and mobile phones. The company was formerly known as Sony Corporation and changed its name to Sony Group Corporation in April 2021. Sony Group Corporation was incorporated in 1946 and is headquartered in Tokyo, Japan.

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.