Smith Douglas Homes (NYSE:SDHC) versus Hovnanian Enterprises (NYSE:HOV) Critical Survey

Hovnanian Enterprises (NYSE:HOV) and Smith Douglas Homes (NYSE:SDHC) are both small-cap construction companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, risk, dividends, profitability, earnings, valuation and institutional ownership.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Hovnanian Enterprises	7.45%	58.22%	9.35%
Smith Douglas Homes	N/A	N/A	N/A

Valuation and Earnings

This table compares Hovnanian Enterprises and Smith Douglas Homes’ gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hovnanian Enterprises	$2.76 billion	0.34	$205.89 million	$27.81	5.49
Smith Douglas Homes	N/A	N/A	N/A	N/A	N/A

Hovnanian Enterprises has higher revenue and earnings than Smith Douglas Homes.

Analyst Recommendations

This is a summary of recent ratings for Hovnanian Enterprises and Smith Douglas Homes, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hovnanian Enterprises	0	0	0	0	N/A
Smith Douglas Homes	0	5	1	0	2.17

Smith Douglas Homes has a consensus target price of $27.70, suggesting a potential downside of 4.52%. Given Smith Douglas Homes’ higher probable upside, analysts plainly believe Smith Douglas Homes is more favorable than Hovnanian Enterprises.

Insider & Institutional Ownership

65.4% of Hovnanian Enterprises shares are held by institutional investors. 17.7% of Hovnanian Enterprises shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Hovnanian Enterprises beats Smith Douglas Homes on 6 of the 8 factors compared between the two stocks.

About Hovnanian Enterprises

Hovnanian Enterprises, Inc., through its subsidiaries, designs, constructs, markets, and sells residential homes in the United States. It offers single-family detached homes, attached townhomes and condominiums, urban infill, and active lifestyle homes with amenities, such as clubhouses, swimming pools, tennis courts, tot lots, and open areas. The company markets and builds homes for first-time buyers, first-time and second-time move-up buyers, luxury buyers, active lifestyle buyers, and empty nesters. It also provides mortgage loans, title insurance, and homeowner's insurance services. The company was founded in 1959 and is headquartered in Matawan, New Jersey.

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.