Financial Comparison: Gafisa (GFA) vs. Lennar (LEN)

Gafisa (NYSE: GFA) and Lennar (NYSE:LEN) are both construction companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, earnings, profitability, analyst recommendations, institutional ownership and dividends.

Profitability

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This table compares Gafisa and Lennar’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gafisa -138.50% -39.31% -12.72%
Lennar 6.84% 11.65% 5.26%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Gafisa and Lennar, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gafisa 3 0 0 0 1.00
Lennar 0 3 15 0 2.83

Lennar has a consensus price target of $71.64, suggesting a potential upside of 31.17%. Given Lennar’s stronger consensus rating and higher probable upside, analysts plainly believe Lennar is more favorable than Gafisa.

Dividends

Gafisa pays an annual dividend of $0.59 per share and has a dividend yield of 8.8%. Lennar pays an annual dividend of $0.16 per share and has a dividend yield of 0.3%. Lennar pays out 4.2% of its earnings in the form of a dividend.

Institutional and Insider Ownership

5.9% of Gafisa shares are owned by institutional investors. Comparatively, 88.7% of Lennar shares are owned by institutional investors. 8.5% of Lennar shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk & Volatility

Gafisa has a beta of 2.09, suggesting that its stock price is 109% more volatile than the S&P 500. Comparatively, Lennar has a beta of 1.23, suggesting that its stock price is 23% more volatile than the S&P 500.

Valuation & Earnings

This table compares Gafisa and Lennar’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gafisa $190.80 million 0.49 -$266.17 million N/A N/A
Lennar $12.65 billion 1.41 $810.48 million $3.81 14.34

Lennar has higher revenue and earnings than Gafisa.

Summary

Lennar beats Gafisa on 11 of the 14 factors compared between the two stocks.

Gafisa Company Profile

Gafisa S.A. operates as a homebuilder in Brazil. The company develops residential units, such as luxury buildings with swimming pools, gyms, visitor parking, and other amenities for upper-income customers; buildings for middle-income customers; and entry-level buildings and house units for lower-income customers. Gafisa S.A. also develops residential land subdivisions for sale; and provides construction services to third parties, and technical and real estate management services. The company was incorporated in 1996 and is headquartered in São Paulo, Brazil.

Lennar Company Profile

Lennar Corporation, together with its subsidiaries, operates as a homebuilder primarily under the Lennar brand in the United States. The company operates through Homebuilding East, Homebuilding Central, Homebuilding West, Lennar Financial Services, Rialto, and Lennar Multifamily segments. Its homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development, and sale of residential land. The company primarily sells single-family attached and detached homes in communities targeted to first-time homebuyers, move-up homebuyers, active adult homebuyers, and luxury homebuyers. The company also offers mortgage financing, title insurance, and closing services for home buyers and others, as well as real estate brokerage services. In addition, it is involved in raising, investing, and managing third party capital; and originating and selling into securitizations commercial mortgage loans, as well as investing in real estate related mortgage loans, properties, and related securities. Further, the company sponsors and invests in private equity vehicles; and provides asset management and other services to the vehicles and other third parties. Additionally, it develops, constructs, and manages multifamily rental properties. Lennar Corporation was founded in 1954 and is based in Miami, Florida.

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