Ryland Earnings Climb 42% in Quarter
Ryland Group Inc. said Wednesday that its second-quarter profit surged 42% thanks to higher home prices and bigger profit margins. The Calabasas-based home builder also raised its earnings forecast for the year.
Net income rose to $76.5 million, or $3.03 a share, compared with $54 million, or $2.03, a year earlier. Revenue rose 9.3% to $918.5 million.
The earnings exceeded analysts’ expectations of $2.52 a share, according to Thomson First Call. Ryland increased its forecast for full-year profit to more than $12 a share. Before Wednesday’s results, analysts had expected full-year profit of $11.32 a share.
The company’s average sales price of $249,000 was up 12% from the same period a year earlier.
Profit margins rose to 24.7% from 21.8% a year earlier.
New housing orders increased slightly, to 4,761. Orders in Texas declined, but orders in other Western markets -- including the Inland Empire, Las Vegas and Phoenix -- rose 18%, to 1,136.
Ryland closed the quarter with about 9,000 units awaiting construction, a 17% increase from the same 2003 period and the highest quarter-end backlog in the company’s history.
Maintaining that momentum could be a challenge, said Greg Gieber, a senior analyst with A.G. Edwards & Sons.
Interest rates are nudging upward, adding to the price of buying a home. And earlier this week, the Commerce Department reported that June housing starts nationwide were at the lowest level in more than a year.
Ryland must “demonstrate what it can do in a less friendly market,” said Gieber, who rates the stock a “hold.”
Ryland Chief Executive R. Chad Dreier said he didn’t expect interest rates to have a harmful effect on his company’s business until they approached 9%. Housing starts in Ryland’s markets are “doing just fine,” he said.
“I worry about the things that would change the mood of the buyer more than I worry about real estate or interest rates or stuff like that,” Dreier said.
The home builder released its earnings after the stock market closed Wednesday. Ryland’s shares dropped $1.63 to $69.37 in regular New York Stock Exchange trading but recovered more than 70 cents in after-hours trading.
