Ryland Confirms LionsGate Buy

Zacks

California-based homebuilder The Ryland Group Inc (RYL) has finalized the acquisition of the assets of LionsGate Homes in Dallas, Texas, which was announced in mid-May 2013. Ryland’s acquisition of LionsGate Homes will allow it to gain control over the Fort Worth market, where LionsGate Homes currently operates 17 active communities. In addition, the acquisition will provide Ryland with approximately 843 lots and homes for future sales and 146 homes, which have already been sold. Financial terms of the deal were not disclosed.

This is Ryland’s third acquisition in the past 11 months, after the acquisition of the assets of Timberstone Homes in Charlotte and Raleigh in Jul 2012 and Trend Homes in Phoenix in Dec 2012.

In the recently reported first quarter 2013, Ryland posted earnings of 43 cents per share compared to the year-ago loss of 7 cents. Ryland’s revenues in the quarter surged 73.6% year over year on the back of increase in homebuilding revenues. The company’s new orders also increased in double-digits.

The favorable situation in the housing market has resulted in increase in demand for new homes, where inventory levels are dropping and prices are moving up. Ryland has been constantly introducing new communities, thus capitalizing on the improving housing markets.

Ryland holds a Zacks Rank #1 (Strong Buy). Other stocks in the homebuilding sector that are worth considering include Meritage Homes Corp (MTH), D. R. Horton Inc. (DHI) and MDC Holdings Inc (MDC). While Meritage and D.R. Horton hold a Zacks Rank #1, MDC carries a Zacks Rank #2 (Buy).

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