Lennar Corporation (LEN), The Ryland Group, Inc. (RYL): US Homebuilders, Gaining Momentum?

Page 1 of 2

The US housing market seems to be recovering amid low mortgage rates and an improving job market that is helping the economy to recover from the financial meltdown. Housing prices have increased dramatically and some analysts are fearful that this will lead into another housing bubble. Property prices increased almost 11% in March 2013 over the past year according to the S&P/Case-Shiller 20-city home price index, the biggest gain since 2006. This could signal an overheating in the housing sector.

This confidence in the homebuilding market has spiraled stock prices of some of the US homebuilders such as Lennar Corporation (NYSE:LEN), which is trading at forward price-to-earnings ratio of 26 times, while Meritage Homes Corp (NYSE:MTH) is trading at 19.5 times and The Ryland Group, Inc. (NYSE:RYL) at 13.6 times.

Lennar Corporation (NYSE:LEN)

Lennar: Solid results

Lennar Corporation (NYSE:LEN) has posted solid figures for the first quarter of 2013. Its revenue from home sales increased 40% to $855 million compared to the same quarter a year earlier, mainly caused by a 28% increase in home deliveries and a 9% average increase in sales price of those deliveries. Its net earnings surged more than 285%, from $14.9 million to $57.5 million in the same period comparison.

Credit: Lennar Corporation (NYSE:LEN)

This could be a good stock to use to gain exposure to the homebuilding sector. Moreover, some homebuilding companies have been pushing prices up as supply is very limited, something that could further increase profits.

Meritage Homes: Enjoying the recovery

Meritage Homes Corp (NYSE:MTH) builds and sells first-family homes across the western, southern and southeastern United States. This company is also enjoying the better market conditions. It posted a 39% increase in home closings and its homes orders improved 35%. The total value of its home orders improved as well, surging 69% for the first quarter of 2013 compared to the same quarter the previous year and totaling $520 million.

Meritage has been increasing its lot supply, reaching 21,029 lots under control in 2013 with net sales orders above their supply capacity. The company’s management expects a 40% increase in home closing revenue in upcoming quarters due to the larger backlog and sales, exhibiting a high confidence in the housing economic recovery.

Ryland: On top of the housing wave

The Ryland Group, Inc. (NYSE:RYL) is a homebuilder and a mortgage finance company. The company is geographically diversified, being present in 17 markets across 13 states. In the first quarter of 2013, the company posted a $374.7 million in revenue, a 73% increase compared to the same quarter of 2012. Its net income also soared from a net loss of $5 million to a profit of $22 million in the same period of comparison. The Ryland Group, Inc. (NYSE:RYL) reported increases of 54.4% in sales volume and 57.2% improvement backlog as compared to the first quarter of 2012. It also ended the quarter with a strong balance sheet with $614.6 million in cash and cash equivalents.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Click here to Read Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 74 percentage points in 2.5 years. Our beta is only 1.2 (download a FREE newsletter and see the details inside)

Lists

Best Selling Magazines in the World

Shortest People in History

The Most Celebrated Holidays in the World

Most Expensive Handbag Brands in the World

Top Selling Comic Book Issues of this Century

The Most Powerful Women in Politics

Best Paid DJs

Most Rebellious Female Artists

Best Paid TV Actresses of 2014

Best Paid Actors of 2014

Most Expensive Horses in the World

Tallest People Ever

Most Encouraging Feminist Celebrities

Best Paid Supermodels of 2014

Top 10 Suburbs for Retirement in 2015

10 Wealthiest Cities in America

Top 10 TED Talks for Entrepreneurs

Best TED Talks on Education

25 Most Dangerous Places to Live in America

Top 10 Ski Resorts in the United States – 2014 List

Top 10 Most Remote Places in the World

Most Visited Museums in the United States

Wealthiest Photographers in the World

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!