Based on the aggregated intelligence of 125,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, homebuilder Ryland
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
Headquarters |
Calabasas, Calif. (1967) |
Market Cap |
$714.35 million |
Industry |
Residential construction |
TTM Revenue |
$2.29 billion |
Management |
CEO R. Chad Dreier (since 1993) |
Return on Equity (average over the last five years and TTM) |
9.7% and (51%) |
Competitors |
Centex |
CAPS members bearish on RYL also bearish on |
Pulte Homes |
CAPS members bullish on RYL also bullish on |
Bank of America |
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:
- Ryland has used aggressive accounting to value its book of raw land and will have further write downs as time goes on.
- RYL is trading above its "inflated" book value.
- Ryland also has significant leverage $700M+.... this limits there ability to buy distressed land and lower their cost basis.
- RYL will not be a profitable as new builders / legacy builders buying distressed land.
- National builders are all crowding the same second tier markets to replace the decline in demand in formerly "hot markets."
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