Ryland Buys Trend Homes

Leading homebuilder, The Ryland Group Inc. (RYL - Snapshot Report) recently announced the acquisition Trend Homes’ operations in Phoenix, Arizona; its second acquisition in the last five months.

The acquisition adds 910 lots and homes to Ryland’s land positions, as well as 106 homes under construction that have already been sold. Najafi Investments held controlling interest in Trend, which currently operates in seven communities in the Phoenix area. All the employees of Trend will join Ryland following the purchase. Trend’s President, Reed Porter will become Ryland’s Phoenix Division President.

Ryland strategically aims to expand to new markets and grow through acquisitions. Earlier this year in July, Ryland acquired the assets of Timberstone Homes in Charlotte and Raleigh.

In late August, Ryland announced the opening of its newest architectural collection of homes at Eagles Nest community in Zionsville. Prior to that, Ryland announced the opening of new McKinley model homes at Sugar Grove community in Plainfield, Indiana.

Our Recommendation

We currently have an Outperform recommendation on Ryland. The Ryland Group carries a Zacks #2 Rank (short term “Buy” rating). With the housing market showing signs of improvement in 2012, management seems confident that the company would be able to play to its strength banking on improving demand, supported by its cost-saving efforts, improving community count and absorption levels.

Based in Southern California, Ryland is a leading homebuilder, manufacturing single-family attached and detached houses. The company operates in 13 states across U.S. and also provides mortgage finance services.

With the housing industry showing strength, another U.S. housing company PulteGroup, Inc. (PHM - Analyst Report) carries a Zacks #2 Rank.