New Home (NWHM) versus Ryland Group (RYL) Critical Review

New Home (NYSE: NWHM) and Ryland Group (NYSE:RYL) are both small-cap construction companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, valuation, risk, dividends and analyst recommendations.

Risk & Volatility

New Home has a beta of 1.87, meaning that its stock price is 87% more volatile than the S&P 500. Comparatively, Ryland Group has a beta of 1.6, meaning that its stock price is 60% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
New Home 2.73% 9.52% 4.26%
Ryland Group 6.52% 14.91% 5.79%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for New Home and Ryland Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
New Home 0 0 0 0 N/A
Ryland Group 0 0 0 0 N/A

Insider & Institutional Ownership

55.7% of New Home shares are owned by institutional investors. 24.2% of New Home shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares New Home and Ryland Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
New Home $694.46 million 0.38 $21.02 million $0.98 12.91
Ryland Group N/A N/A N/A $3.26 12.52

New Home has higher revenue and earnings than Ryland Group. Ryland Group is trading at a lower price-to-earnings ratio than New Home, indicating that it is currently the more affordable of the two stocks.

Summary

Ryland Group beats New Home on 5 of the 9 factors compared between the two stocks.

About New Home

The New Home Company Inc. is a homebuilding company. The Company focuses on the design, construction and sale of consumer-driven homes in various metropolitan areas within certain markets in California and Arizona, including coastal Southern California, the San Francisco Bay area, metro Sacramento and the greater Phoenix area. The Company’s segments include homebuilding and fee building. The homebuilding operations consist of divisions in Northern California, Southern California and its division in Arizona, which is established through the purchase of lots in an unconsolidated joint venture. The Company is focused on building and selling homes for its own account. It is focused on identifying sites and creating communities that allow it to design, construct and sell consumer-driven single-family detached and attached homes in major metropolitan areas in coastal Southern California, the San Francisco Bay area, metro Sacramento and the greater Phoenix area.

About Ryland Group

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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