KB Home (NYSE:KBH) and Toll Brothers (NYSE:TOL) are both mid-cap construction companies, but which is the superior business? We will compare the two companies based on the strength of their risk, institutional ownership, earnings, profitability, dividends, valuation and analyst recommendations.
Valuation & Earnings
This table compares KB Home and Toll Brothers' revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
KB Home | $4.18 billion | 1.07 | $268.77 million | $3.13 | 15.63 |
Toll Brothers | $7.08 billion | 1.05 | $446.62 million | $3.40 | 17.67 |
Toll Brothers has higher revenue and earnings than KB Home. KB Home is trading at a lower price-to-earnings ratio than Toll Brothers, indicating that it is currently the more affordable of the two stocks.
Dividends
KB Home pays an annual dividend of $0.60 per share and has a dividend yield of 1.2%. Toll Brothers pays an annual dividend of $0.68 per share and has a dividend yield of 1.1%. KB Home pays out 19.2% of its earnings in the form of a dividend. Toll Brothers pays out 20.0% 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. KB Home has raised its dividend for 2 consecutive years and Toll Brothers has raised its dividend for 1 consecutive years. KB Home is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider and Institutional Ownership
86.8% of KB Home shares are owned by institutional investors. Comparatively, 87.2% of Toll Brothers shares are owned by institutional investors. 5.4% of KB Home shares are owned by insiders. Comparatively, 10.9% 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 will outperform the market over the long term.
Profitability
This table compares KB Home and Toll Brothers' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
KB Home | 7.08% | 11.66% | 5.74% |
Toll Brothers | 6.31% | 9.42% | 4.15% |
Analyst Ratings
This is a summary of current recommendations and price targets for KB Home and Toll Brothers, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
KB Home | 0 | 6 | 8 | 2 | 2.75 |
Toll Brothers | 4 | 5 | 6 | 0 | 2.13 |
KB Home presently has a consensus target price of $45.4667, suggesting a potential downside of 6.31%. Toll Brothers has a consensus target price of $52.5333, suggesting a potential downside of 12.44%. Given KB Home's stronger consensus rating and higher probable upside, equities research analysts clearly believe KB Home is more favorable than Toll Brothers.
Risk & Volatility
KB Home has a beta of 1.9, indicating that its share price is 90% more volatile than the S&P 500. Comparatively, Toll Brothers has a beta of 1.64, indicating that its share price is 64% more volatile than the S&P 500.
Summary
KB Home beats Toll Brothers on 12 of the 18 factors compared between the two stocks.