On January 5, 2013, Zacks Investment Research upgraded
Ryland Group, Inc.
(
RYL
) to a Zacks #1 Rank (Strong Buy).
Why the Upgrade?
Ryland Group, Inc has been witnessing rising earnings estimates
on the back of strong fiscal third-quarter 2012 results and
recent acquisitions. Moreover, this well-known homebuilding and
mortgage-finance company delivered positive earnings surprises in
2 of the last 3 quarters. The long-term expected earnings growth
rate for this stock is 10.0%.
Ryland Group reported fiscal third-quarter (ended September 30)
results on October 24. Non-GAAP earnings per share came in at 21
cents, surpassing the Zacks Consensus Estimate of 17 cents by
23.5%. Earnings grew significantly from a loss of 9 cents in the
prior-year quarter.
Double-digit growth in homebuilding revenues, expanded margins
and the company's cost control initiatives led to the strong
earnings performance in the quarter. The company's strong
top-line growth was driven by over 35% growth in homebuilding
revenue, number of homes closed and backlog. The company also
witnessed 11.4% year-over-year growth in the number of active
communities.
The Ryland Group believes in acquisitions to drive growth. The
company recently acquired the Phoenix, Arizona operations and
assets of Trend Homes. Previously, the company had acquired the
assets of Timberstone Homes in Charlotte and Raleigh in July
2012.
The demand for new homes is increasing owing to expensive home
rental market, affordable prices of homes, cost saving
energy-efficient features of the new homes and low mortgage
rates. More companies are investing in building new homes in
order to meet the growing housing demand, which is resulting in
declining inventory levels and growing prices.
The Zacks Consensus Estimate for fiscal 2012 increased 30% to 78
cents per share as most of the estimates were revised higher over
the last 90 days. For fiscal 2013, the Zacks Consensus Estimate
increased by 18% to $2.03 per share over the last 90 days.
Other Stocks to Consider
Other homebuilders with a favorable Zacks Rank and worth
considering include
MDC Holdings Inc.
(
MDC
) with a Zacks #1 Rank (Strong Buy);
Lennar Corporation
(
LEN
) and
PulteGroup, Inc.
(
PHM
) both carrying a Zacks #2 Rank (Buy).
LENNAR CORP -A (LEN): Free Stock Analysis
Report
MDC HLDGS (MDC): Free Stock Analysis Report
PULTE GROUP ONC (PHM): Free Stock Analysis
Report
RYLAND GRP INC (RYL): Free Stock Analysis
Report
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