Analyzing La-Z-Boy (NYSE:LZB) & Meritage Homes (NYSE:MTH)

Meritage Homes (NYSE:MTH) and La-Z-Boy (NYSE:LZB) are both consumer discretionary companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, analyst recommendations, valuation, profitability, earnings and dividends.

Dividends

Meritage Homes pays an annual dividend of $1.92 per share and has a dividend yield of 3.0%. La-Z-Boy pays an annual dividend of $0.97 per share and has a dividend yield of 3.3%. Meritage Homes pays out 40.2% of its earnings in the form of a dividend. La-Z-Boy pays out 49.2% 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. Meritage Homes has increased its dividend for 2 consecutive years and La-Z-Boy has increased its dividend for 4 consecutive years. La-Z-Boy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current ratings for Meritage Homes and La-Z-Boy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meritage Homes	0	8	4	0	2.33
La-Z-Boy	1	1	3	0	2.40

Meritage Homes currently has a consensus price target of $76.75, indicating a potential upside of 19.05%. La-Z-Boy has a consensus price target of $39.50, indicating a potential upside of 34.43%. Given La-Z-Boy’s stronger consensus rating and higher probable upside, analysts clearly believe La-Z-Boy is more favorable than Meritage Homes.

Institutional and Insider Ownership

98.4% of Meritage Homes shares are owned by institutional investors. Comparatively, 99.6% of La-Z-Boy shares are owned by institutional investors. 2.5% of Meritage Homes shares are owned by insiders. Comparatively, 3.1% of La-Z-Boy shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk & Volatility

Meritage Homes has a beta of 1.35, meaning that its stock price is 35% more volatile than the S&P 500. Comparatively, La-Z-Boy has a beta of 1.23, meaning that its stock price is 23% more volatile than the S&P 500.

Earnings & Valuation

This table compares Meritage Homes and La-Z-Boy”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Meritage Homes	$5.86 billion	0.72	$453.01 million	$4.78	13.49
La-Z-Boy	$2.13 billion	0.55	$101.99 million	$1.97	14.92

Meritage Homes has higher revenue and earnings than La-Z-Boy. Meritage Homes is trading at a lower price-to-earnings ratio than La-Z-Boy, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Meritage Homes and La-Z-Boy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Meritage Homes	6.11%	7.13%	4.83%
La-Z-Boy	3.86%	11.79%	6.12%

Summary

La-Z-Boy beats Meritage Homes on 9 of the 17 factors compared between the two stocks.

About Meritage Homes

Meritage Homes Corporation, together with its subsidiaries, designs and builds single-family attached and detached homes in the United States. The company operates through two segments, Homebuilding and Financial Services. It acquires and develops land; and constructs, markets, and sells homes for entry-level and first move-up buyers in Arizona, California, Colorado, Utah, Texas, Florida, Georgia, North Carolina, South Carolina, and Tennessee. The company also offers title and escrow, mortgage, insurance, and closing/settlement services to its homebuyers. Meritage Homes Corporation was founded in 1985 and is based in Scottsdale, Arizona.

About La-Z-Boy

La-Z-Boy Incorporated manufactures, markets, imports, exports, distributes, and retails upholstery furniture products, accessories, and casegoods furniture products in the United States, Canada, and internationally. It operates through Wholesale, Retail, Corporate and Other segments. The Wholesale segment manufactures, and imports upholstered furniture, such as recliners and motion furniture, sofas, loveseats, chairs, sectionals, modulars, ottomans, and sleeper sofas; and imports, distributes, and retails casegoods (wood) furniture, including occasional pieces, bedroom sets, dining room sets, entertainment centers, and occasional pieces. This segment sells its products directly to La-Z-Boy Furniture Galleries stores, operators of La-Z-Boy Comfort Studio locations, England Custom Comfort Center locations, dealers, and other independent retailers. The Retail segment sells upholstered furniture, casegoods, and other accessories to the end consumer through its retail network. The company also produces reclining chairs; and manufactures and distributes residential furniture. Its Corporate and Other segment sells the products through its website. The company was formerly known as La-Z-Boy Chair Company and changed its name to La-Z-Boy Incorporated in 1996. La-Z-Boy Incorporated was founded in 1927 and is headquartered in Monroe, Michigan.