Analyzing Smith Douglas Homes (NYSE:SDHC) and Legacy Housing (NASDAQ:LEGH)

Smith Douglas Homes (NYSE:SDHC) and Legacy Housing (NASDAQ:LEGH) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, risk, earnings, institutional ownership, analyst recommendations and valuation.

Profitability

This table compares Smith Douglas Homes and Legacy Housing’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Smith Douglas Homes	1.13%	0.12%	0.10%
Legacy Housing	26.66%	9.47%	8.80%

Analyst Ratings

This is a summary of current ratings and recommmendations for Smith Douglas Homes and Legacy Housing, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Smith Douglas Homes	3	5	1	0	1.78
Legacy Housing	0	4	0	0	2.00

Smith Douglas Homes presently has a consensus price target of $16.60, suggesting a potential downside of 1.91%. Legacy Housing has a consensus price target of $21.00, suggesting a potential downside of 4.11%. Given Smith Douglas Homes’ higher possible upside, equities analysts plainly believe Smith Douglas Homes is more favorable than Legacy Housing.

Institutional and Insider Ownership

89.4% of Legacy Housing shares are owned by institutional investors. 30.1% of Legacy Housing shares are owned 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.

Valuation & Earnings

This table compares Smith Douglas Homes and Legacy Housing”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Smith Douglas Homes	$975.46 million	0.89	$16.07 million	$1.25	13.54
Legacy Housing	$184.19 million	2.84	$61.64 million	$1.95	11.23

Legacy Housing has lower revenue, but higher earnings than Smith Douglas Homes. Legacy Housing is trading at a lower price-to-earnings ratio than Smith Douglas Homes, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Smith Douglas Homes has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500. Comparatively, Legacy Housing has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500.

Summary

Legacy Housing beats Smith Douglas Homes on 9 of the 14 factors compared between the two stocks.

About Smith Douglas Homes

Smith Douglas Homes Corp., together with its subsidiaries, engages in the design, construction, and sale of single-family homes in the southeastern United States. It also provides closing, escrow, and title insurance services. The company sells its products to entry-level and empty-nest homebuyers. Smith Douglas Homes Corp. was founded in 2008 and is headquartered in Woodstock, Georgia.

About Legacy Housing

Legacy Housing Corporation engages in the building, sale, and financing of manufactured homes and tiny houses primarily in the southern United States. It manufactures and provides for the transport of mobile homes, including 1 to 5 bedrooms with 1 to 3 1/2 bathrooms; and provides wholesale financing to dealers and mobile home parks, as well as retail financing to consumers. The company also offers inventory financing for its independent retailers; consumer financing for its products; and financing to manufactured housing community owners that buy or lease its products for use in their rental housing communities. In addition, it involved in financing and developing new manufactured home communities. The company markets its homes under the Legacy brand through a network of independent retailers and company-owned stores; and directly to manufactured home communities. Legacy Housing Corporation was founded in 2005 and is headquartered in Bedford, Texas.