Why You Should Add Lyon William (WLH) to Your Portfolio Now
Major homebuilders have been enjoying good tidings in recent times given the positive fundamentals of the housing market. The positive momentum is evident from the robust Zacks Industry Rank (Top 14% out of 265 industries). In fact, the Zacks Building Residential/Commercial industry has outperformed the broader market on a year-to-date basis, as you can see below:
One such company cashing in on the positive momentum is Lyon William Homes WLH -- primarily engaged in design, construction, marketing and sale of single-family detached and attached homes in California, Arizona, Nevada and Colorado. Let us delve deeper into the other factors which make this Zacks Rank #1 (Strong Buy) stock a lucrative pick.
What Makes Lyon William a Solid Pick?
Stock Price Movement: Lyon William’s shares have gained 36.4% in the last one year, compared with the Zacks categorized Building Residential/Commercial industry’s growth of 20%. That said, we have noticed that Lyon William has outperformed the industry in the 12-week and 52-week frame. The overall improvement in the U.S. economy along with the improving housing momentum is expected to drive top-line growth in 2017.
Valuation Looks Rational: We find the price-to-book ratio as the best multiple for valuing homebuilders because of their asset-driven nature. Lyon William currently has a trailing 12 month P/B ratio of 0.84, comparing favorably with the industry’s P/B ratio of 1.22. Hence, its lower-than-market positioning hints at more upside in the quarters ahead.
Earnings Growth: Lyon William has put up a historical EPS growth rate (average trailing 12-month EPS growth rate in the last 3–5 years of actual earnings) of 32.8%, compared with the industry average of 18.9%.
Meanwhile, the company’s 2017 earnings is looking to grow at a rate of 38.4%, while the Zacks categorized Building Residential/Commercial industry’s earnings are likely to grow 17.3%.
Estimate Revisions: Earnings estimates for the current quarter and year have also gone up by 36.1% and 8.1%, respectively, in the last 30 days. The upside in earnings estimate revisions shows unwavering confidence that analysts have in the company.
Other Stocks to Consider
Other top-ranked stocks in the industry include M/I Homes, Inc. MHO, Lennar Corporation LEN and KB Home KBH.
M/I Homes sports a Zacks Rank #1 (Strong Buy). Full-year 2017 earnings for the company are expected to increase 36.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Lennar, a Zacks Rank #2 (Buy) stock, is expected to witness 7.5% growth in fiscal 2017 earnings.
KB Home, also a Zacks Rank #2 stock, is expected to witness 43.3% growth in fiscal 2017 earnings.
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