Comparing NVR (NVR) & CalAtlantic Group (CAA)

CalAtlantic Group (NYSE: CAA) and NVR (NYSE:NVR) are both mid-cap construction companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, risk, earnings, dividends, valuation, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

79.8% of NVR shares are held by institutional investors. 39.5% of CalAtlantic Group shares are held by insiders. Comparatively, 11.3% of NVR shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations and price targets for CalAtlantic Group and NVR, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CalAtlantic Group 1 7 5 0 2.31
NVR 0 4 1 0 2.20

CalAtlantic Group presently has a consensus target price of $40.00, suggesting a potential upside of 14.45%. NVR has a consensus target price of $2,645.00, suggesting a potential downside of 3.82%. Given CalAtlantic Group’s stronger consensus rating and higher possible upside, research analysts clearly believe CalAtlantic Group is more favorable than NVR.

Dividends

CalAtlantic Group pays an annual dividend of $0.16 per share and has a dividend yield of 0.5%. NVR does not pay a dividend. CalAtlantic Group pays out 4.5% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares CalAtlantic Group and NVR’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CalAtlantic Group $6.67 billion 0.58 $792.59 million $3.59 9.74
NVR $6.12 billion 1.68 $800.07 million $126.57 21.73

NVR has higher revenue, but lower earnings than CalAtlantic Group. CalAtlantic Group is trading at a lower price-to-earnings ratio than NVR, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

CalAtlantic Group has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500. Comparatively, NVR has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500.

Profitability

This table compares CalAtlantic Group and NVR’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CalAtlantic Group 7.26% 11.40% 5.51%
NVR 8.67% 37.43% 18.93%

Summary

NVR beats CalAtlantic Group on 9 of the 16 factors compared between the two stocks.

About CalAtlantic Group

CalAtlantic Group, Inc. is a diversified builder of single-family attached and detached homes. The Company operates through two segments: homebuilding and financial services. The homebuilding segment operations include acquiring and developing land, and constructing and selling single-family attached and detached homes. The Financial Services segment includes mortgage financing operation, which provides mortgage financing to its homebuyers in the markets, in which it operates, and sells all of the loans it originates in the secondary mortgage market. As of December 31, 2016, the Company built homes in communities that meet the desires of customers across the homebuilding spectrum, from entry level to luxury, in over 40 metropolitan statistical areas spanning 17 states and the District of Columbia. The Company also provides mortgage, title and escrow services. The Company provides mortgage loans to its homebuyers through its mortgage financing subsidiary, CalAtlantic Mortgage.

About NVR

NVR, Inc. is engaged in the construction and sale of single-family detached homes, townhomes and condominium buildings. The Company’s segments are Homebuilding Mid Atlantic, Homebuilding North East, Homebuilding Mid East, Homebuilding South East and Mortgage Banking. Its Homebuilding Mid Atlantic segment operates in various geographic regions, which include Maryland, Virginia, West Virginia, Delaware and Washington, District of Columbia (D.C.). Its Homebuilding North East segment operates in various geographic regions, which include New Jersey and Eastern Pennsylvania. Its Homebuilding Mid East segment operates in various geographic regions, which include New York, Ohio, Indiana and Illinois, The Homebuilding South East segment operates in various geographic regions, which include North Carolina, South Carolina, Florida and Tennessee. The Mortgage Banking segment provides mortgage-related services to home building customers through its mortgage banking operations.

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