D.R. Horton (NYSE:DHI – Get Free Report) and Flexsteel Industries (NASDAQ:FLXS – Get Free Report) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, earnings, risk and analyst recommendations.
Earnings and Valuation
This table compares D.R. Horton and Flexsteel Industries”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| D.R. Horton | $34.25 billion | 1.18 | $3.59 billion | $10.51 | 13.73 |
| Flexsteel Industries | $459.18 million | 0.93 | $33.13 million | $6.21 | 12.81 |
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 increased its dividend for 10 consecutive years and Flexsteel Industries has increased 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% | 16.11% | 9.67% |
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.
Analyst Ratings
This is a summary of current recommendations and price targets for D.R. Horton and Flexsteel Industries, as reported 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 | 3 | 1 | 0 | 2.25 |
D.R. Horton presently has a consensus target price of $166.92, suggesting a potential upside of 15.67%. Flexsteel Industries has a consensus target price of $80.00, suggesting a potential upside of 0.58%. Given D.R. Horton’s stronger consensus rating and higher probable upside, analysts plainly believe D.R. Horton is more favorable than Flexsteel Industries.
Institutional and Insider Ownership
90.6% of D.R. Horton shares are owned by institutional investors. Comparatively, 36.3% of Flexsteel Industries shares are owned by institutional investors. 0.7% of D.R. Horton shares are owned by company insiders. Comparatively, 11.2% of Flexsteel Industries shares are owned 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.
Summary
D.R. Horton beats Flexsteel Industries on 12 of the 17 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.
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