The Berkeley Group (OTCMKTS:BKGFF) vs. M.D.C. (NYSE:MDC) Critical Analysis

M.D.C. (NYSE:MDC) and The Berkeley Group (OTCMKTS:BKGFF) are both consumer cyclical companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, dividends, earnings, risk and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings for M.D.C. and The Berkeley Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
M.D.C.	1	4	0	0	1.80
The Berkeley Group	0	0	0	0	N/A

M.D.C. presently has a consensus price target of $52.13, indicating a potential downside of 17.24%. Given M.D.C.’s higher probable upside, equities research analysts plainly believe M.D.C. is more favorable than The Berkeley Group.

Profitability

This table compares M.D.C. and The Berkeley Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
M.D.C.	8.64%	12.32%	7.34%
The Berkeley Group	N/A	N/A	N/A

Institutional and Insider Ownership

88.1% of M.D.C. shares are held by institutional investors. Comparatively, 45.9% of The Berkeley Group shares are held by institutional investors. 23.3% of M.D.C. shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

M.D.C. pays an annual dividend of $2.20 per share and has a dividend yield of 3.5%. The Berkeley Group pays an annual dividend of $1.80 per share and has a dividend yield of 3.1%. M.D.C. pays out 41.7% of its earnings in the form of a dividend. The Berkeley Group pays out 68.8% 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. M.D.C. has increased its dividend for 1 consecutive years. M.D.C. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares M.D.C. and The Berkeley Group’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
M.D.C.	$4.64 billion	1.02	$401.01 million	$5.28	11.93
The Berkeley Group	N/A	N/A	N/A	$2.62	22.26

M.D.C. has higher revenue and earnings than The Berkeley Group. M.D.C. is trading at a lower price-to-earnings ratio than The Berkeley Group, indicating that it is currently the more affordable of the two stocks.

Summary

M.D.C. beats The Berkeley Group on 11 of the 12 factors compared between the two stocks.

About M.D.C.

M.D.C. Holdings, Inc., through its subsidiaries, engages in the homebuilding and financial service businesses. Its homebuilding operations include purchasing finished lots or developing lots for the construction and sale primarily of single-family detached homes to first-time and first-time move-up homebuyers under the Richmond American Homes name. The company conducts its homebuilding operations in Arizona, California, Nevada, New Mexico, Oregon, Texas, Washington, Colorado, Idaho, Utah, Alabama, Florida, Maryland, Pennsylvania, Tennessee, and Virginia. Its financial services operations comprise originating mortgage loans primarily for homebuyers; providing insurance coverage primarily to its homebuilding subsidiaries and subcontractors for homes sold by its homebuilding subsidiaries, and for work performed in completed subdivisions; acting as a re-insurer on the claims; selling third-party personal property and casualty insurance products to homebuyers; and offering title agency services to homebuilding subsidiaries and customers in Colorado, Florida, Maryland, Nevada, Pennsylvania, and Virginia. The company was founded in 1972 and is headquartered in Denver, Colorado. As of April 19, 2024, M.D.C. Holdings, Inc. operates as a subsidiary of SH Residential Holdings, LLC.

About The Berkeley Group

The Berkeley Group Holdings plc, together with its subsidiaries, engages in the residential-led and mixed-use property development and ancillary activities in the United Kingdom. The company is involved in land selling activities. It operates under the Berkeley, St Edward, St George, St James, St Joseph, and St William brand names. The Berkeley Group Holdings plc was founded in 1976 and is headquartered in Cobham, the United Kingdom.