Critical Survey: Sekisui House (OTCMKTS:SKHSY) versus D.R. Horton (NYSE:DHI)

D.R. Horton (NYSE:DHI) and Sekisui House (OTCMKTS:SKHSY) are both large-cap construction companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, institutional ownership, profitability, valuation, analyst recommendations, risk and dividends.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
D.R. Horton	11.46%	15.74%	11.07%
Sekisui House	4.78%	9.88%	4.10%

Earnings and Valuation

This table compares D.R. Horton and Sekisui House”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
D.R. Horton	$36.80 billion	1.43	$4.76 billion	$12.47	14.19
Sekisui House	$26.67 billion	0.55	$1.44 billion	$2.03	10.98

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

Analyst Recommendations

This is a breakdown of recent ratings for D.R. Horton and Sekisui House, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
D.R. Horton	2	6	6	1	2.40
Sekisui House	0	1	0	0	2.00

D.R. Horton currently has a consensus target price of $154.38, suggesting a potential downside of 12.72%. Given D.R. Horton’s stronger consensus rating and higher probable upside, equities analysts clearly believe D.R. Horton is more favorable than Sekisui House.

Volatility and Risk

D.R. Horton has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500. Comparatively, Sekisui House has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500.

Dividends

D.R. Horton pays an annual dividend of $1.60 per share and has a dividend yield of 0.9%. Sekisui House pays an annual dividend of $0.88 per share and has a dividend yield of 3.9%. D.R. Horton pays out 12.8% of its earnings in the form of a dividend. Sekisui House pays out 43.3% 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.

Insider & Institutional Ownership

90.6% of D.R. Horton shares are held by institutional investors. Comparatively, 0.0% of Sekisui House shares are held by institutional investors. 0.5% of D.R. Horton shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

D.R. Horton beats Sekisui House on 17 of the 18 factors compared between the two stocks.

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.

About Sekisui House

Sekisui House, Ltd. designs, constructs, and contracts built-to-order detached houses in Japan and internationally. The company operates through Custom Detached Houses, Rental Housing, Architectural/Civil Engineering, Remodeling, Real Estate Management Fees, Houses For Sale, Condominiums, Urban Redevelopment, and Overseas segments. It also engages in contracting of design and construction of custom detached houses, rental housing, office building, commercial buildings, and other properties; construction of reinforced concrete rental housing and commercial buildings; contracting of design and construction of civil engineering works; remodeling and renovation of houses; subleasing, management, operation, and brokerage of real estate; sale of houses and residential land; and sales of condominiums. Sekisui House, Ltd. was incorporated in 1929 and is headquartered in Osaka, Japan.