Head to Head Review: The Berkeley Group (OTCMKTS:BKGFF) vs. Lennar (NYSE:LEN)

The Berkeley Group (OTCMKTS:BKGFF) and Lennar (NYSE:LEN) are both consumer cyclical companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, analyst recommendations, profitability, risk and earnings.

Dividends

The Berkeley Group pays an annual dividend of $1.80 per share and has a dividend yield of 3.1%. Lennar pays an annual dividend of $2.00 per share and has a dividend yield of 1.3%. The Berkeley Group pays out 68.8% of its earnings in the form of a dividend. Lennar pays out 14.0% 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. Lennar has raised its dividend for 1 consecutive years.

Insider and Institutional Ownership

45.9% of The Berkeley Group shares are owned by institutional investors. Comparatively, 81.1% of Lennar shares are owned by institutional investors. 9.4% of Lennar shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares The Berkeley Group and Lennar’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
The Berkeley Group	N/A	N/A	N/A	$2.62	22.26
Lennar	$34.23 billion	1.29	$3.94 billion	$14.27	11.08

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

Profitability

This table compares The Berkeley Group and Lennar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
The Berkeley Group	N/A	N/A	N/A
Lennar	11.59%	15.90%	10.89%

Analyst Ratings

This is a summary of recent ratings and target prices for The Berkeley Group and Lennar, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
The Berkeley Group	0	0	0	0	N/A
Lennar	3	3	11	0	2.47

Lennar has a consensus target price of $163.88, suggesting a potential upside of 3.65%. Given Lennar’s higher possible upside, analysts clearly believe Lennar is more favorable than The Berkeley Group.

Summary

Lennar beats The Berkeley Group on 11 of the 13 factors compared between the two stocks.

About The Berkeley Group

The Berkeley Group Holdings plc, together with its subsidiaries, engages in the residential-led and mixed-use property development and ancillary activities in the United Kingdom. The company is involved in land selling activities. It operates under the Berkeley, St Edward, St George, St James, St Joseph, and St William brand names. The Berkeley Group Holdings plc was founded in 1976 and is headquartered in Cobham, the United Kingdom.

About Lennar

Lennar Corporation, together with its subsidiaries, operates as a homebuilder primarily under the Lennar brand in the United States. It operates through Homebuilding East, Homebuilding Central, Homebuilding Texas, Homebuilding West, Financial Services, Multifamily, and Lennar Other segments. The company's 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; and development, construction, and management of multifamily rental properties. It also offers residential mortgage financing, title, insurance, and closing services for home buyers and others, as well as originates and sells securitization commercial mortgage loans. In addition, the company is involved in the fund investment activity. It primarily serves first-time, move-up, active adult, and luxury homebuyers. Lennar Corporation was founded in 1954 and is based in Miami, Florida.