D.R. Horton vs LGI Which Offers More Value?

D.R. Horton and LGI Homes are two well-known companies in the residential construction industry. D.R. Horton is one of the largest homebuilders in the United States, with a strong track record of delivering high-quality homes to customers. On the other hand, LGI Homes is a rapidly growing company that focuses on providing affordable housing options to first-time homebuyers. Both companies have seen growth in their stock prices in recent years, but there are differences in their business models and strategies that investors should consider when deciding where to invest.

D.R. Horton or LGI?

When comparing D.R. Horton and LGI, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between D.R. Horton and LGI.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. D.R. Horton has a dividend yield of 0.87%, while LGI has a dividend yield of 0.85%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. D.R. Horton reports a 5-year dividend growth of 14.87% year and a payout ratio of 8.31%. On the other hand, LGI reports a 5-year dividend growth of 0.00% year and a payout ratio of 32.28%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with D.R. Horton P/E ratio at 10.25 and LGI's P/E ratio at 31.95. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. D.R. Horton P/B ratio is 1.93 while LGI's P/B ratio is 4.97.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, D.R. Horton has seen a 5-year revenue growth of 1.44%, while LGI's is 5.53%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with D.R. Horton's ROE at 19.63% and LGI's ROE at 15.74%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $147.78 for D.R. Horton and A$2.93 for LGI. Over the past year, D.R. Horton's prices ranged from $133.02 to $199.85, with a yearly change of 50.24%. LGI's prices fluctuated between A$1.80 and A$3.20, with a yearly change of 77.78%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.