Investors braced for a bumpy ride ahead of Ryland Group's (NYSE: RYL) earnings announcement, as the company has wavered between beating and falling short of analyst predictions during the past fiscal year. The company will unveil its latest earnings on Wednesday, July 27. Ryland Group is a homebuilder and a mortgage-finance company, which consists of six operating business segments: four geographically determined homebuilding regions, financial services, and corporate.

What analysts say:

  • Buy, sell, or hold?: Analysts generally think investors should hang on to Ryland Group, with half rating the stock a hold. Analysts like Ryland Group better than competitor Standard Pacific overall. Two out of seven analysts rate Standard Pacific a buy, compared with five of 12 for Ryland Group. While analysts still rate the stock a hold, they are a little more optimistic about it compared with three months ago.
  • Revenue forecasts: On average, analysts predict $227.1 million in revenue this quarter. That would represent a decline of 39.2% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is a loss of $0.22 per share. Estimates range from a loss of $0.42 to a loss of $0.03.

What our community says:
Most CAPS All-Stars are skeptical of RYL's prospects, with 62% giving it an "underperform" rating. Like the All-Stars, the community is also not a fan of Ryland Group, with 57.2% granting it an "underperform" rating. Fools haven't been shy with their opinions lately, logging 366 posts in the past 30 days. Ryland Group's bearish CAPS rating of one out of five stars falls short of the Fool community's sentiment.

Revenue has fallen for the past three quarters. The company's gross margin shrank by 2.2 percentage points in the last quarter. Revenue fell 30.2% while cost of sales fell 28.5% to $157.8 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters. 

Quarter Q1 Q4 Q3 Q2
Gross Margin 9.8% 10.4% 7.1% 12.9%
Operating Margin (13.3%) (9.2%) (14.5%) (1.2%)
Net Margin (11.2%) (8.4%) (14.1%) (5.8%)
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