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

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

Earnings and Valuation

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

	Gross Revenue	Net Income	Price/Earnings Ratio
Smith Douglas Homes	$975.46 million	$123.18 million	11.39
Smith Douglas Homes Competitors	$6.34 billion	$777.96 million	7.97

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%

Institutional and Insider Ownership

89.0% of shares of all “Operative builders” companies are held by institutional investors. 18.7% of shares of all “Operative builders” companies are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and target prices for Smith Douglas Homes and its competitors, as provided by MarketBeat.

	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 currently has a consensus price target of $24.80, indicating a potential upside of 23.72%. As a group, “Operative builders” companies have a potential upside of 30.34%. Given Smith Douglas Homes’ competitors stronger consensus rating and higher probable upside, analysts clearly believe Smith Douglas Homes has less favorable growth aspects than its competitors.

Volatility and Risk

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

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.