PulteGroup (PHM) and Rollins (ROL) Financial Contrast

PulteGroup (NYSE: PHM) and Rollins (NYSE:ROL) are both construction companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, analyst recommendations, profitability, dividends and risk.

Valuation and Earnings

This table compares PulteGroup and Rollins’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
PulteGroup $8.57 billion 0.96 $447.22 million $1.44 19.90
Rollins $1.67 billion 6.52 $179.12 million $0.82 61.03

PulteGroup has higher revenue and earnings than Rollins. PulteGroup is trading at a lower price-to-earnings ratio than Rollins, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

85.3% of PulteGroup shares are owned by institutional investors. Comparatively, 38.1% of Rollins shares are owned by institutional investors. 0.7% of PulteGroup shares are owned by company insiders. Comparatively, 56.3% of Rollins shares are owned by company 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 current recommendations and price targets for PulteGroup and Rollins, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PulteGroup 1 7 5 0 2.31
Rollins 0 1 3 0 2.75

PulteGroup currently has a consensus target price of $32.73, suggesting a potential upside of 14.23%. Rollins has a consensus target price of $43.00, suggesting a potential downside of 14.07%. Given PulteGroup’s higher possible upside, equities analysts clearly believe PulteGroup is more favorable than Rollins.

Dividends

PulteGroup pays an annual dividend of $0.36 per share and has a dividend yield of 1.3%. Rollins pays an annual dividend of $0.56 per share and has a dividend yield of 1.1%. PulteGroup pays out 25.0% of its earnings in the form of a dividend. Rollins pays out 68.3% 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. Rollins has increased its dividend for 14 consecutive years. PulteGroup is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares PulteGroup and Rollins’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PulteGroup 5.22% 15.52% 6.93%
Rollins 10.70% 29.76% 18.71%

Risk & Volatility

PulteGroup has a beta of 1.12, indicating that its share price is 12% more volatile than the S&P 500. Comparatively, Rollins has a beta of 0.21, indicating that its share price is 79% less volatile than the S&P 500.

Summary

PulteGroup beats Rollins on 9 of the 17 factors compared between the two stocks.

PulteGroup Company Profile

PulteGroup, Inc. is a homebuilder in the United States. The Company’s segments include Homebuilding and Financial Services. Its Homebuilding operations are engaged in the acquisition and development of land primarily for residential purposes within the United States and the construction of housing on such land. Its Financial Services operations consist principally of mortgage banking and title operations. The Company conducts its financial services business, through Pulte Mortgage LLC (Pulte Mortgage) and other subsidiaries. Pulte Mortgage arranges financing through the origination of mortgage loans. The Company’s subsidiaries are engaged in the homebuilding business. It offers a product line to meet the needs of homebuyers in its focused markets. Through its brands, which include Centex, Pulte Homes, Del Webb, DiVosta Homes, and John Wieland Homes and Neighborhoods, the Company offers a range of home designs, including single-family detached, townhouses, condominiums and duplexes.

Rollins Company Profile

Rollins, Inc. is a service company, which operates in pest and termite control business segment. The Company, through its subsidiaries, provides its services to both residential and commercial customers in North America, Australia, and Europe with international franchises in Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, Canada, Australia, and Mexico. The Company’s subsidiaries include Orkin LLC. (Orkin), Western Pest Services (Western), The Industrial Fumigant Company, LLC (IFC), HomeTeam Pest Defense (HomeTeam), Rollins Australia and Rollins Wildlife Services. Orkin either serves customers, directly or through franchises operations, in the United States, Canada, Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa and Mexico, providing pest control services and protection against termite damage, rodents and insects to homes and businesses, including hotels and food service establishments.

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