Head-To-Head Comparison: Forestar Group (NYSE:FOR) versus Compass (NYSE:COMP)

Compass (NYSE:COMP) and Forestar Group (NYSE:FOR) are both real estate companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, profitability, analyst recommendations, earnings and risk.

Institutional and Insider Ownership

67.0% of Compass shares are owned by institutional investors. Comparatively, 35.5% of Forestar Group shares are owned by institutional investors. 2.9% of Compass shares are owned by insiders. Comparatively, 0.5% of Forestar Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Compass and Forestar Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Compass	$6.96 billion	N/A	-$58.50 million	$0.06	174.95
Forestar Group	$1.66 billion	0.82	$167.90 million	$3.33	8.04

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

Risk & Volatility

Compass has a beta of 2.32, meaning that its stock price is 132% more volatile than the S&P 500. Comparatively, Forestar Group has a beta of 1.41, meaning that its stock price is 41% more volatile than the S&P 500.

Profitability

This table compares Compass and Forestar Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Compass	0.63%	3.62%	1.37%
Forestar Group	9.88%	9.42%	5.36%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Compass and Forestar Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Compass	0	6	8	1	2.67
Forestar Group	0	4	2	0	2.33

Compass currently has a consensus target price of $14.15, suggesting a potential upside of 34.84%. Forestar Group has a consensus target price of $32.67, suggesting a potential upside of 22.05%. Given Compass’ stronger consensus rating and higher probable upside, research analysts plainly believe Compass is more favorable than Forestar Group.

Summary

Compass beats Forestar Group on 9 of the 14 factors compared between the two stocks.

About Compass

Compass, Inc. provides real estate brokerage services in the United States. It operates a cloud-based platform that provides an integrated suite of software for customer relationship management, marketing, client service, operations, and other functionality in the real estate industry. The company offers mobile apps that allow agents to manage their business anytime and anywhere, as well as designs consumer-grade user interfaces, automated and simplified workflows for agent-client interactions, and insight-rich dashboards and reports. It also provides full-service title and escrow/settlement services to real estate agents' clients, real estate companies, and financial institutions relating to the closing of home purchases as well as the refinancing of home loans; and Compass Concierge, a program in which home sellers access to capital to front the cost of home improvement services. The company was formerly known as Urban Compass, Inc. and changed its name to Compass, Inc. in January 2021.Compass, Inc. was incorporated in 2012 and is headquartered in New York, New York.

About Forestar Group

Forestar Group Inc. operates as a residential lot development company in the United States. The company acquires land and develops infrastructure for single-family residential communities. It sells its residential single-family finished lots to local, regional, and national homebuilders. The company was incorporated in 2005 and is headquartered in Arlington, Texas. Forestar Group Inc. operates as a subsidiary of D.R. Horton, Inc.