California-based homebuilder The Ryland Group Inc recently announced its decision to acquire the assets of LionsGate Homes in Dallas, Texas. The acquisition news drove the shares of Ryland, which hit a new 52-week high of $49.25 on May 10.
Shares of this Zacks Rank #1 (Strong Buy) stock have been gaining momentum following the announcement of solid first quarter 2013 results on Apr 24. In fact, the stock attained new 52-week highs of $45.50 on Apr 25 and $47.37 on May 3.
Ryland’s share prices closed at $48.99 on May 10, recording a healthy return of 30.6%, year-to-date. The company’s long-term estimated EPS growth rate is 10%. Average volume of shares traded over the last three months came in at approximately 1,472K.
Ryland’s acquisition of LionsGate Homes will allow it to gain control over the Fort Worth market, where LionsGate Homes currently operates 15 active communities. In addition, the acquisition will provide Ryland with approximately 885 lots and homes for future sales. 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.
Solid First Quarter Performance
Ryland posted strong first quarter 2013 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 an 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.
Other Stocks to Consider
Other stocks in the homebuilding sector that are worth considering include Meritage Homes Corp (MTH - Snapshot Report), D. R. Horton Inc. (DHI - Analyst Report) and MDC Holdings Inc (MDC - Snapshot Report). While Meritage and D.R. Horton hold a Zacks Rank #1, MDC carries a Zacks Rank #2 (Buy).