Financial Contrast: Flexsteel Industries (NASDAQ:FLXS) & D.R. Horton (NYSE:DHI)

D.R. Horton (NYSE:DHI) and Flexsteel Industries (NASDAQ:FLXS) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, profitability, institutional ownership, analyst recommendations, risk and valuation.

Dividends

D.R. Horton pays an annual dividend of $1.80 per share and has a dividend yield of 1.2%. Flexsteel Industries pays an annual dividend of $1.00 per share and has a dividend yield of 1.3%. D.R. Horton pays out 17.1% of its earnings in the form of a dividend. Flexsteel Industries pays out 16.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. D.R. Horton has raised its dividend for 10 consecutive years and Flexsteel Industries has raised its dividend for 1 consecutive years. Flexsteel Industries is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares D.R. Horton and Flexsteel Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
D.R. Horton	9.15%	12.47%	8.59%
Flexsteel Industries	7.21%	15.09%	9.39%

Analyst Recommendations

This is a breakdown of current ratings and price targets for D.R. Horton and Flexsteel Industries, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
D.R. Horton	0	10	5	0	2.33
Flexsteel Industries	0	2	1	0	2.33

D.R. Horton presently has a consensus price target of $166.92, suggesting a potential upside of 10.05%. Given D.R. Horton’s higher probable upside, research analysts clearly believe D.R. Horton is more favorable than Flexsteel Industries.

Insider & Institutional Ownership

90.6% of D.R. Horton shares are held by institutional investors. Comparatively, 36.3% of Flexsteel Industries shares are held by institutional investors. 0.7% of D.R. Horton shares are held by company insiders. Comparatively, 11.2% of Flexsteel Industries shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares D.R. Horton and Flexsteel Industries”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
D.R. Horton	$34.25 billion	1.24	$3.59 billion	$10.51	14.43
Flexsteel Industries	$459.18 million	0.91	$20.15 million	$6.21	12.59

D.R. Horton has higher revenue and earnings than Flexsteel Industries. Flexsteel Industries is trading at a lower price-to-earnings ratio than D.R. Horton, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

D.R. Horton has a beta of 1.37, indicating that its share price is 37% more volatile than the S&P 500. Comparatively, Flexsteel Industries has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500.

Summary

D.R. Horton beats Flexsteel Industries on 11 of the 16 factors compared between the two stocks.

About D.R. Horton

D.R. Horton, Inc. operates as a homebuilding company in East, North, Southeast, South Central, Southwest, and Northwest regions in the United States. It engages in the acquisition and development of land; and construction and sale of residential homes in 118 markets across 33 states under the names of D.R. Horton, America’s Builder, Express Homes, Emerald Homes, and Freedom Homes. The company constructs and sells single-family detached homes; and attached homes, such as townhomes, duplexes, and triplexes. It also provides mortgage financing services; and title insurance policies, and examination and closing services, as well as engages in the residential lot development business. In addition, the company develops, constructs, owns, leases, and sells multi-family and single-family rental properties; and owns non-residential real estate, including ranch land and improvements. It primarily serves homebuyers. D.R. Horton, Inc. was founded in 1978 and is headquartered in Arlington, Texas.

About Flexsteel Industries

Flexsteel Industries, Inc., together with its subsidiaries, operates as a manufacturer, importer, and markets of upholstered furniture for residential and contract markets in the United States. It provides upholstered furniture, such as sofas, loveseats, chairs, reclining rocking chairs, swivel rockers, sofa beds, convertible bedding units, occasional tables, desks, dining tables and chairs, kitchen storage, bedroom furniture, and outdoor furniture. The company distributes its products through e-commerce channels and dealer sales force. It also engages in export related activities. Flexsteel Industries, Inc. was founded in 1893 and is based in Dubuque, Iowa.