Critical Analysis: IRSA Inversiones Y Representaciones (NYSE:IRS) and LGI Homes (NASDAQ:LGIH)

IRSA Inversiones Y Representaciones (NYSE:IRS) and LGI Homes (NASDAQ:LGIH) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, dividends, profitability, valuation, earnings, risk and institutional ownership.

Volatility and Risk

IRSA Inversiones Y Representaciones has a beta of 1.36, indicating that its stock price is 36% more volatile than the S&P 500. Comparatively, LGI Homes has a beta of 1.69, indicating that its stock price is 69% more volatile than the S&P 500.

Insider and Institutional Ownership

45.5% of IRSA Inversiones Y Representaciones shares are held by institutional investors. Comparatively, 84.9% of LGI Homes shares are held by institutional investors. 25.1% of IRSA Inversiones Y Representaciones shares are held by company insiders. Comparatively, 12.3% of LGI Homes shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares IRSA Inversiones Y Representaciones and LGI Homes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
IRSA Inversiones Y Representaciones	25.95%	7.91%	3.94%
LGI Homes	7.63%	8.00%	4.21%

Analyst Recommendations

This is a breakdown of current ratings and target prices for IRSA Inversiones Y Representaciones and LGI Homes, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
IRSA Inversiones Y Representaciones	0	0	0	0	0.00
LGI Homes	1	2	2	0	2.20

LGI Homes has a consensus target price of $71.6667, indicating a potential upside of 7.64%. Given LGI Homes’ stronger consensus rating and higher possible upside, analysts clearly believe LGI Homes is more favorable than IRSA Inversiones Y Representaciones.

Earnings & Valuation

This table compares IRSA Inversiones Y Representaciones and LGI Homes”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
IRSA Inversiones Y Representaciones	$658.73 million	1.71	-$58.25 million	$1.58	9.44
LGI Homes	$2.20 billion	0.70	$196.07 million	$6.63	10.04

LGI Homes has higher revenue and earnings than IRSA Inversiones Y Representaciones. IRSA Inversiones Y Representaciones is trading at a lower price-to-earnings ratio than LGI Homes, indicating that it is currently the more affordable of the two stocks.

Summary

LGI Homes beats IRSA Inversiones Y Representaciones on 11 of the 14 factors compared between the two stocks.

About IRSA Inversiones Y Representaciones

IRSA Inversiones y Representaciones Sociedad Anónima, together with its subsidiaries, engages in the diversified real estate activities in Argentina. It operates through five segments: Shopping Malls, Offices, Hotels, Sales and Developments, and Others. The company is involved in the acquisition, development, and operation of shopping malls, office buildings, and other non-shopping mall properties primarily for rental purposes. It also acquires and operates luxury hotels and resorts under the Intercontinental, Libertador, and Llao Llao names; develops and sells residential properties, including apartment tower complexes; and acquires undeveloped land reserves for future development or sale. In addition, the company engages in the development and operation of stadium; and provision of ¡appa!, a digital customer loyalty system platform, for consumption in shopping malls, use of parking spaces, and redemption of corporate benefits. The company was incorporated in 1943 and is headquartered in Buenos Aires, Argentina. IRSA Inversiones y Representaciones Sociedad Anónima operates as a subsidiary of Cresud S.A.C.I.F. y A.

About LGI Homes

LGI Homes, Inc. designs, constructs, and sells homes. It offers entry-level homes, such as attached and detached homes, and active adult homes under the LGI Homes brand name; and luxury series homes under the Terrata Homes brand name. The company also engages in the wholesale business, which include building and selling homes to large institutions looking to acquire single-family rental properties. It serves customers in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada, West Virginia, Virginia, Pennsylvania, Maryland, and Utah. LGI Homes, Inc. was founded in 2003 and is headquartered in The Woodlands, Texas.