Ryland Buys Cornell Homes' Assets
Calif.-based homebuilder, The Ryland Group Inc (RYL), has finalized the acquisition of the assets of Philadelphia-based homebuilder, Cornell Homes.
The acquisition will allow Ryland to gain control over 12 active communities in addition to an ongoing project in the Tri-state area. The project includes 97 homes ready for delivery, eight decorated models and 1,716 additional lots for future sales.
Ryland will retain all of Cornell’s employees and Cornell’s President, Greg Lingo, will join the company as its Philadelphia Division President.
This is Ryland’s fourth acquisition in the past 11 months, after the acquisition of Timberstone Homes’ Charlotte and Raleigh divisions in Jul 2012, Trend Homes, Phoenix in Dec 2012, and LionsGate Homes, Dallas in June this year.
In its first-quarter 2013 results, the Zacks Rank #1(Strong Buy) company reported on Apr 24, 2013, Ryland posted earnings of 43 cents per share, much better than the year-ago loss of 7 cents. The Zacks Consensus Estimate for the second quarter is currently pegged at 64 cents per share. Ryland has beaten the Zacks Consensus Estimate in all the past four quarters with an impressive average earnings surprise of 26.29%.
The rising demand for new homes has led to a favorable situation in the housing market, where inventory levels are dropping and prices are moving up. Ryland, like other homebuilders such as Lennar Corporation (LEN), PulteGroup Inc. (PHM), and D.R. Horton, Inc. (DHI), has been gaining momentum from the strong recovery of the U.S. housing market. Recent comments by Federal Reserve Chairman Ben Bernanke to keep interest rates low for some time provided further momentum to the stock and the housing industry, in general. Moreover, its geographic diversity, strong cash position and focus on less price sensitive move-up buyers provide the company an edge over its competitors.
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