Lennar (NYSE: LEN) and Lyon William Homes (NYSE:WLH) are both construction companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, earnings, risk, dividends, institutional ownership, analyst recommendations and profitability.

Earnings & Valuation

This table compares Lennar and Lyon William Homes’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lennar $10.95 billion 1.31 $911.84 million $3.47 17.55
Lyon William Homes $1.41 billion 0.65 $59.69 million $1.53 18.75

Lennar has higher revenue and earnings than Lyon William Homes. Lennar 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.

Institutional & Insider Ownership

81.3% of Lennar shares are held by institutional investors. Comparatively, 98.1% of Lyon William Homes shares are held by institutional investors. 12.2% of Lennar shares are held by company insiders. Comparatively, 22.3% of Lyon William Homes shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Lennar and Lyon William Homes, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lennar 0 8 8 0 2.50
Lyon William Homes 0 2 2 0 2.50

Lennar presently has a consensus target price of $58.00, indicating a potential downside of 4.78%. Lyon William Homes has a consensus target price of $27.25, indicating a potential downside of 5.02%. Given Lennar’s higher probable upside, equities research analysts clearly believe Lennar is more favorable than Lyon William Homes.

Dividends

Lennar pays an annual dividend of $0.16 per share and has a dividend yield of 0.3%. Lyon William Homes does not pay a dividend. Lennar pays out 4.6% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Lennar 6.65% 12.37% 5.60%
Lyon William Homes 3.61% 9.33% 3.58%

Volatility and Risk

Lennar has a beta of 1.35, meaning that its stock price is 35% more volatile than the S&P 500. Comparatively, Lyon William Homes has a beta of 1.81, meaning that its stock price is 81% more volatile than the S&P 500.

Summary

Lennar beats Lyon William Homes on 11 of the 15 factors compared between the two stocks.

Lennar Company Profile

Lennar Corporation is a provider of real estate related financial services, commercial real estate, investment management and finance company. The Company is a homebuilder that operates in various states. Its segments include Homebuilding East, Homebuilding Central, Homebuilding West, Lennar Financial Services, Rialto and Lennar Multifamily. It is a developer of multifamily rental properties. Its Homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development and sale of residential land. It operates primarily under the Lennar brand name. The Lennar Financial Services segment includes mortgage financing, title insurance and closing services for both buyers of its homes and others. The Rialto segment is a real estate, investment management, and finance company. The Lennar Multifamily segment focuses on developing a portfolio of institutional multifamily rental properties in the United States markets.

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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