Lyon William Homes (NYSE: WLH) and Century Communities (NYSE:CCS) are both small-cap construction companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, institutional ownership, profitabiliy, earnings, dividends and valuation.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Lyon William Homes and Century Communities, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lyon William Homes 0 2 1 0 2.33
Century Communities 0 0 3 0 3.00

Lyon William Homes presently has a consensus price target of $23.75, indicating a potential upside of 1.41%. Century Communities has a consensus price target of $26.67, indicating a potential upside of 2.96%. Given Century Communities’ stronger consensus rating and higher possible upside, analysts plainly believe Century Communities is more favorable than Lyon William Homes.

Profitability

This table compares Lyon William Homes and Century Communities’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lyon William Homes 2.90% 7.35% 2.68%
Century Communities 4.85% 10.91% 5.03%

Valuation & Earnings

This table compares Lyon William Homes and Century Communities’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Lyon William Homes $1.40 billion 0.53 $88.95 million $1.05 22.30
Century Communities $1.04 billion 0.55 $76.56 million $2.36 10.97

Lyon William Homes has higher revenue and earnings than Century Communities. Century Communities is trading at a lower price-to-earnings ratio than Lyon William Homes, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Lyon William Homes has a beta of 1.79, suggesting that its stock price is 79% more volatile than the S&P 500. Comparatively, Century Communities has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500.

Insider and Institutional Ownership

66.0% of Century Communities shares are held by institutional investors. 21.3% of Lyon William Homes shares are held by company insiders. Comparatively, 23.2% of Century Communities shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Century Communities beats Lyon William Homes on 10 of the 14 factors compared between the two stocks.

Lyon William Homes Company Profile

William Lyon Homes is primarily engaged in the design, construction and sale of single family detached and attached homes in California, Arizona and Nevada. The Company conducts its homebuilding operations through four reportable operating segments: Southern California, Northern California, Arizona and Nevada. For the three months ended March 31, 2012, 37% of home closings were derived from the Company’s California operations. The Company designs, constructs and sells a range of homes designed to meet the needs of each of its markets, although it primarily focuses sales to the entry-level and first time move-up home buyer markets. During the year ended December 31, 2011, the Company marketed its homes through 19 sales locations. In October 2013, the Company purchase 221 homesites at the master-planned Southshore community in Aurora, Colorado.

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