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Trade-Ideas: Ryland Group (RYL) Is Today's "Dead Cat Bounce" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Ryland Group ( RYL) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Ryland Group as such a stock due to the following factors:

  • RYL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $84.5 million.
  • RYL has traded 1.1 million shares today.
  • RYL is up 3.2% today.
  • RYL was down 5% yesterday.

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More details on RYL:

The Ryland Group, Inc. operates as a homebuilder and a mortgage-finance company in the United States. It engages in the design, construction, and sale of homes, as well as provides mortgage origination, title insurance, escrow, and insurance services. The stock currently has a dividend yield of 0.3%. RYL has a PE ratio of 6.6. Currently there are 6 analysts that rate Ryland Group a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Ryland Group has been 1.8 million shares per day over the past 30 days. Ryland Group has a market cap of $1.7 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.59 and a short float of 12.5% with 2.08 days to cover. Shares are down 0.5% year to date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ryland Group as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from the ratings report include:

  • RYL's very impressive revenue growth greatly exceeded the industry average of 21.7%. Since the same quarter one year prior, revenues leaped by 67.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 2871.42% and other important driving factors, this stock has surged by 50.51% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although RYL had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • The gross profit margin for RYLAND GROUP INC is rather low; currently it is at 22.39%. Regardless of RYL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, RYL's net profit margin of 46.89% significantly outperformed against the industry.
  • Currently the debt-to-equity ratio of 1.79 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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