New Communities from Ryland

The California based homebuilder Ryland Group Inc. (RYL - Snapshot Report) has recently opened eight new communities in Indianapolis.

The communities are opened to the homebuyers from Jan 19 to January 27. The houses in the communities belong to the Americana, Architectural and Estate Collections of the company.

The houses are all well furnished with Ryland’s Signature Gourmet Kitchen consisting of granite countertops and stainless steel appliances. Homes in the communities are priced between $130 and $360. While homes at The Trails and The Preserve community at South Lake are priced at $130, those at Willows in the Zionsville featuring homes from the Estate collection will be available at $360.

The recovery in the housing market, along with strong fiscal third-quarter 2012 results have resulted in the rise in earnings estimates for the company.

Ryland Group reported fiscal third-quarter (ended September 30) results on October 24. Non-GAAP earnings per share came in at 21 cents, surpassing the Zacks Consensus Estimate by 23.5%. Earnings grew significantly from a loss of 9 cents in the prior-year quarter. Moreover, this well-known homebuilding and mortgage-finance company delivered positive earnings surprises in 2 of the last 3 quarters. The long-term expected earnings growth rate for this stock is 10.0%.

Double-digit growth in homebuilding revenues, expanded margins and the company’s cost control initiatives led to the strong earnings performance in the quarter. The company’s strong top-line growth was driven by over 35% growth in homebuilding revenue, number of homes closed and backlog. The company also witnessed 11.4% year-over-year growth in the number of active communities.

The Ryland Group believes in acquisitions to drive growth. The company recently acquired the Phoenix, Arizona operations and assets of Trend Homes. Previously, the company had acquired the assets of Timberstone Homes in Charlotte and Raleigh in July 2012.

The demand for new homes is increasing owing to expensive home rental market, affordable prices of homes, cost saving energy-efficient features of the new homes and low mortgage rates. More companies are investing in building new homes in order to meet the growing housing demand, which is resulting in declining inventory levels and inflating prices.

Currently, Ryland Group carries a Zacks Rank #2 (Buy). You can also consider investing in Meritage Homes (MTH - Snapshot Report), MDC Holdings (MDC - Snapshot Report) or NVR Inc. (NVR - Snapshot Report) that offer exposure to more attractive housing segments and also carry a Zacks Rank #1 ( Strong Buy).