Please ensure Javascript is enabled for purposes of website accessibility

1-Star Stocks Poised to Plunge: Ryland Group

By Brian D. Pacampara, CFA - Updated Apr 5, 2017 at 7:52PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Market-lagging returns could be written in this one-star stock.

Based on the aggregated intelligence of 125,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, homebuilder Ryland (NYSE:RYL) has received the dreaded one-star ranking. Our data has shown that one-star stocks woefully lag the market average; conversely, five-star stocks outperform the S&P by a significant margin.

With that in mind, let's take a closer look at Ryland's business, and see what CAPS investors are saying about the stock right now.

Ryland facts


Calabasas, Calif. (1967)

Market Cap

$714.35 million


Residential construction

TTM Revenue

$2.29 billion


CEO R. Chad Dreier (since 1993)
COO Larry Nicholson (since 2007)

Return on Equity (average over the last five years and TTM)

9.7% and (51%)


Centex (NYSE:CTX)

CAPS members bearish on RYL also bearish on

Pulte Homes (NYSE:PHM)
Toll Brothers (NYSE:TOL)

CAPS members bullish on RYL also bullish on

Bank of America (NYSE:BAC)
Citigroup (NYSE:C)

Sources: Capital IQ (a division of Standard & Poor's), and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 221 of the 262 All-Star members who have rated Ryland -- or 84% -- believe the stock will underperform the S&P 500 going forward. These Fools include TheGarcipian and dexion10, both of whom are ranked in the top 5% of our community.

Last month, TheGarcipian let the bearish stats speak for themselves: "Losses are piling up, and little new building is being done. Profit margins are at -21.3%, operating margin is barely above water at 3% as is Return on Assets at 1.8%, while Return on Equity is a blistering -47.2% in the most recent quarter."

In a pitch from last week, dexion10 shares that bearishness, listing 10 great reasons why Fools should run from Ryland. Below are the first five, but be sure to check out Nos. 6 through 10, too:

  1. Ryland has used aggressive accounting to value its book of raw land and will have further write downs as time goes on.
  2. RYL is trading above its "inflated" book value.
  3. Ryland also has significant leverage $700M+.... this limits there ability to buy distressed land and lower their cost basis.
  4. RYL will not be a profitable as new builders / legacy builders buying distressed land.
  5. National builders are all crowding the same second tier markets to replace the decline in demand in formerly "hot markets."

What do you think about Ryland, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. CAPS is 100% free, so simply click here to get started.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Bank of America is a Motley Fool Income Investor pick. The Fool's disclosure policy always gets a perfect score.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Citigroup Inc. Stock Quote
Citigroup Inc.
$53.90 (3.48%) $1.81
Bank of America Corporation Stock Quote
Bank of America Corporation
$35.27 (3.96%) $1.34
Toll Brothers, Inc. Stock Quote
Toll Brothers, Inc.
$49.26 (4.21%) $1.99
PulteGroup, Inc. Stock Quote
PulteGroup, Inc.
$43.99 (4.29%) $1.81
KB Home Stock Quote
KB Home
$32.75 (4.30%) $1.35

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/10/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.