Critical Analysis: Smith Douglas Homes (SDHC) & Its Rivals

Smith Douglas Homes (NYSE:SDHC) is one of 26 publicly-traded companies in the “Operative builders” industry, but how does it compare to its competitors? We will compare Smith Douglas Homes to related businesses based on the strength of its earnings, risk, analyst recommendations, profitability, dividends, institutional ownership and valuation.

Insider and Institutional Ownership

89.0% of shares of all “Operative builders” companies are owned by institutional investors. 18.7% of shares of all “Operative builders” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

Smith Douglas Homes has a beta of 1.44, suggesting that its stock price is 44% more volatile than the S&P 500. Comparatively, Smith Douglas Homes’ competitors have a beta of 2.72, suggesting that their average stock price is 172% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for Smith Douglas Homes and its competitors, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Smith Douglas Homes	1	4	0	0	1.80
Smith Douglas Homes Competitors	394	1869	1728	53	2.36

Smith Douglas Homes presently has a consensus target price of $24.80, indicating a potential upside of 22.53%. As a group, “Operative builders” companies have a potential upside of 32.10%. Given Smith Douglas Homes’ competitors stronger consensus rating and higher probable upside, analysts plainly believe Smith Douglas Homes has less favorable growth aspects than its competitors.

Earnings and Valuation

This table compares Smith Douglas Homes and its competitors gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Smith Douglas Homes	$975.46 million	$123.18 million	11.50
Smith Douglas Homes Competitors	$6.34 billion	$777.96 million	7.78

Smith Douglas Homes’ competitors have higher revenue and earnings than Smith Douglas Homes. Smith Douglas Homes is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Profitability

This table compares Smith Douglas Homes and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Smith Douglas Homes	4.60%	21.01%	16.10%
Smith Douglas Homes Competitors	9.23%	84.38%	10.92%

Summary

Smith Douglas Homes competitors beat Smith Douglas Homes on 11 of the 13 factors compared.

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.