Top 15 Residential Construction Stocks, Ranked by Marvin Scores
Marvin ranks 15 residential construction stocks by Overall score within their industry. Toll Brothers, Cavco Industries and Legacy Housing sit at the top. Scores compare each company with its industry peers today and are not advice.
Residential construction companies build and sell homes, including traditional houses and factory-built or manufactured homes. This list covers 15 of them that meet Marvin's minimum size, ordered by Marvin's Overall score from highest to lowest.
A high score does not mean a stock will do well, and a low score does not mean a company is failing. Each score only shows how a company's quality and opportunity measures compare with other residential construction companies today. Look at the figures behind each score, especially revenue growth, margins and debt.
Some figures are missing for several companies, so the blurbs below use only what is available. Treat this as a starting point for your own research, not as a recommendation.
The list
How Marvin ranked these stocks
Marvin included companies above a minimum size and ranked them by Overall score, highest first, within the Residential Construction industry. Scores run from zero to one hundred and are relative to this industry only, so a score here is not comparable with a score for a company in another industry. The Overall score blends Marvin's quality and opportunity measures.
Companies above about $300 million in size, ranked by Marvin scores (0-100, relative to each company's own industry). The Residential Construction industry, highest Overall score first.
The stocks, one by one
Toll Brothers, Inc. TOL
Toll Brothers has the top Overall score at 94, with quality at 89. An operating margin of 13.8% and free cash flow margin of 10.1% suggest solid profitability. Caution: revenue growth was only 1.1%, so sales barely expanded last year.
Cavco Industries, Inc. CVCO
Cavco Industries combines a quality score of 95 with revenue growth of 11.4%, a healthy pace of expansion. Its operating margin is 10.2%. Caution: its opportunity score of 62 is much lower than its quality score, so it ranks lower on that measure.
Legacy Housing Corporation LEGH
Legacy Housing stands out for margins: gross margin of 49.8% and operating margin of 32.8% are very strong. Its free cash flow margin is 21.5%. Caution: revenue growth was -10.7%, a decline, and return on equity is a modest 9.1%.
PulteGroup, Inc. PHM
PulteGroup turned a free cash flow margin of 9.2% and a return on equity of 14.6% into an Overall score of 78. Both suggest decent profitability. Caution: revenue growth was -3.5%, a decline, and operating and gross margin figures are not available.
Champion Homes, Inc. SKY
Champion Homes has a very low debt-to-equity ratio of 0.02, meaning it uses little borrowing. Revenue growth was 7.3% and operating margin was 8.7%. Caution: its opportunity score of 52 is middling, and its margins are lower than the top-ranked names.
D.R. Horton, Inc. DHI
D.R. Horton has a quality score of 79, supported by a free cash flow margin of 9.6% and return on equity of 12.8%. Caution: revenue growth was -6.9%, a decline, and its opportunity score of 42 is low, which holds back its Overall score.
Green Brick Partners, Inc. GRBK
Green Brick Partners shows a gross margin of 30.2% and return on equity of 14.7%, both reasonable. Its free cash flow margin is 5.7%. Caution: revenue growth was -1.0%, a slight decline, and its quality score is only 59. Operating margin is not available.
NVR, Inc. NVR
NVR has the strongest return on equity in the top half of the list at 33.7%, plus a free cash flow margin of 11.0% and a quality score of 84. Caution: its opportunity score is just 27, and revenue growth was -1.9%, a small decline.
Century Communities, Inc. CCS
Century Communities has a high opportunity score of 83, but its quality score is only 43. Caution: free cash flow margin is a thin 0.9%, return on equity is 5.2%, and revenue growth was -6.4%, a decline.
M/I Homes, Inc. MHO
M/I Homes has an operating margin of 9.3% and a free cash flow margin of 4.6%, which point to moderate profitability. Return on equity is 9.8%. Caution: revenue growth was -1.9%, a small decline, and its quality score is 53.
Meritage Homes Corporation MTH
Meritage Homes has an Overall score of 43, with quality at 38 and opportunity at 57. Return on equity is 6.5%, which is modest. Caution: growth, margin and debt figures are not available, so there is little detail to judge the business.
Lennar Corporation LEN
Lennar has a quality score of 28 and a return on equity of 6.1%, both on the weak side within its industry. Free cash flow margin is 2.5%. Caution: revenue growth was -3.5%, a decline, and margin and debt figures are not available.
Installed Building Products, Inc. IBP
Installed Building Products has a very high return on equity of 39.2% and an operating margin of 12.4%. Revenue growth was 1.0%. Caution: debt-to-equity is 1.87, a notable amount of borrowing, and its opportunity score is only 22.
KB Home KBH
KB Home has an Overall score of 27. Its free cash flow margin of 0.6% is very thin and return on equity is 6.0%. Caution: revenue growth was -10.0%, one of the larger declines on this list, and margin and debt figures are not available.
Dream Finders Homes, Inc. DFH
Dream Finders Homes has the lowest Overall score here, with quality at just 6. Return on equity is 10.2%, but free cash flow margin is -3.9%, meaning it spent more cash than it generated. Caution: debt-to-equity is 1.27, and revenue growth was -2.9%.
Common questions
What do residential construction companies do?
They build homes and sell them to buyers. Some build traditional houses, while others make factory-built or manufactured homes. Their results often depend on how many homes people can afford to buy, which is influenced by things like interest rates.
Does a lower rank mean a company is a bad business?
No. Marvin's scores only show how a company compares with other residential construction companies today. A lower-ranked company may still be profitable, but its quality or opportunity measures looked weaker than those of the companies above it.
Why are some figures missing for certain stocks?
Some companies did not have every measure available in Marvin's data, such as operating margin, gross margin or debt-to-equity. In those cases the blurb relies on the figures that are available and notes the gap, so check the company's own reports for the full picture.
Keep reading
- Top 15 Consumer Cyclical Stocks by Marvin Opportunity Score
- Top 15 Consumer Cyclical Companies by Business Quality
- Top 15 Consumer Cyclical Stocks Right Now
- Top 25 Quality Stocks Trading Well Below Their Highs
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Marvin's scores (0-100) compare each company with others in its industry today. Growth and margin figures come from SEC filings. This is general information, not personal investment advice or a recommendation to buy or sell anything. Do your own research.