Upside Surprise from Ryland

The builder's earnings tumble but beat Wall Street's expectation.
Author:
Publish date:

Homebuilder

Ryland Group

(RYL)

said Wednesday that third-quarter earnings fell 26% from a year ago, primarily due to a decline in home closings and margins.

Ryland earned $87.9 million, or $1.97 per share, down from a profit of $118 million, or $2.39 per share, a year earlier. Still, the results topped analysts' average estimate for earnings of $1.77 a share, according to Thomson First Call.

The earnings beat largely was due to a lower-than-expected tax rate and land sales, says Raymond James analyst Rick Murray.

Total revenue fell 10% to $1.13 billion, as home closings fell 15% to 3,688 units.

Gross profit margins from home sales averaged 22.5% for the third quarter, down from 25.7% a year earlier, as the builder stepped up sales incentives.

Ryland left its earnings target for the year intact at $7.75 to $8.25 a share.

The company's new orders in the quarter fell 46% to 2,372 units. The dollar value of the company's backlog of homes sold but not yet delivered was $2.1 billion at quarter end, down 34% from a year earlier.

Ryland said it repurchased 1.85 million shares, or 4.2% of its stock, in the quarter.

Shares of the company were adding $2.84, or 6.5%, to $46.50 in after-hours trading.