NEW YORK (
-- Ryland Group
) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and poor profit margins.
Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 25.4%. Since the same quarter one year prior, revenues rose by 21.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- RYLAND GROUP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, RYLAND GROUP INC continued to lose money by earning -$0.67 versus -$1.83 in the prior year. This year, the market expects an improvement in earnings ($0.44 versus -$0.67).
- After a year of stock price fluctuations, the net result is that RYL's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The gross profit margin for RYLAND GROUP INC is rather low; currently it is at 16.50%. Regardless of RYL's low profit margin, it has managed to increase from the same period last year.
- Currently the debt-to-equity ratio of 1.94 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated.
The Ryland Group, Inc. operates as a homebuilders and a mortgage-finance company in the United States. Its operations in homebuilding process range from design, construction, and sale to mortgage origination, title insurance, escrow, and insurance services to its homebuyers. Ryland Group has a market cap of $831.4 million and is part of the
industry. Shares are up 17.9% year to date as of the close of trading on Friday.
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