PulteGroup (NYSE: PHM) and Ryland Group (NYSE:RYL) are both construction companies, but which is the better investment? We will contrast the two companies based on the strength of their profitabiliy, institutional ownership, earnings, risk, analyst recommendations, valuation and dividends.

Dividends

PulteGroup pays an annual dividend of $0.36 per share and has a dividend yield of 1.5%. Ryland Group does not pay a dividend. PulteGroup pays out 19.8% of its earnings in the form of a dividend. PulteGroup has increased its dividend for 3 consecutive years.

Insider & Institutional Ownership

87.5% of PulteGroup shares are held by institutional investors. 0.7% of PulteGroup shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares PulteGroup and Ryland Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
PulteGroup $7.86 billion 0.98 $1.05 billion $1.82 13.36
Ryland Group N/A N/A N/A N/A N/A

PulteGroup has higher revenue and earnings than Ryland Group.

Analyst Recommendations

This is a summary of current recommendations and price targets for PulteGroup and Ryland Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PulteGroup 1 5 5 0 2.36
Ryland Group 0 0 0 0 N/A

PulteGroup presently has a consensus price target of $24.44, suggesting a potential upside of 0.55%. Given PulteGroup’s higher possible upside, research analysts plainly believe PulteGroup is more favorable than Ryland Group.

Profitability

This table compares PulteGroup and Ryland Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PulteGroup 7.77% 12.74% 6.07%
Ryland Group 6.52% 14.91% 5.79%

Summary

PulteGroup beats Ryland Group on 10 of the 12 factors compared between the two stocks.

PulteGroup Company Profile

PulteGroup, Inc. is a homebuilder in the United States. The Company’s segments include Homebuilding and Financial Services. Its Homebuilding operations are engaged in the acquisition and development of land primarily for residential purposes within the United States and the construction of housing on such land. Its Financial Services operations consist principally of mortgage banking and title operations. The Company conducts its financial services business, through Pulte Mortgage LLC (Pulte Mortgage) and other subsidiaries. Pulte Mortgage arranges financing through the origination of mortgage loans. The Company’s subsidiaries are engaged in the homebuilding business. It offers a product line to meet the needs of homebuyers in its focused markets. Through its brands, which include Centex, Pulte Homes, Del Webb, DiVosta Homes, and John Wieland Homes and Neighborhoods, the Company offers a range of home designs, including single-family detached, townhouses, condominiums and duplexes.

Ryland Group Company Profile

The Ryland Group, Inc. is a homebuilder and a mortgage-finance company. RMC Mortgage Corporation and its subsidiaries (RMCMC) and Ryland Mortgage Company provides mortgage financing and related services for more than 255,000 homebuyers. The Company consists of six reportable segments: four geographically determined homebuilding regions; financial services, and corporate. The Company’s business is conducted and located in the United States, and its operations span all aspects of the homebuying process from design, construction and sale to mortgage origination, title and escrow services. The Company generally builds homes for entry-level buyers and first and second-time move-up buyers. The financial services segment provides mortgage-related products and services, as well as title and escrow services, to its homebuyers. Corporate is a non-operating business segment, which is engaged in supporting operations.

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