William Lyon Homes (WLH) & Its Rivals Critical Review

William Lyon Homes (NYSE: WLH) is one of 20 public companies in the “Operative builders” industry, but how does it contrast to its competitors? We will compare William Lyon Homes to similar businesses based on the strength of its valuation, dividends, profitability, earnings, analyst recommendations, risk and institutional ownership.

Analyst Ratings

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This is a summary of recent ratings for William Lyon Homes and its competitors, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
William Lyon Homes 0 1 2 0 2.67
William Lyon Homes Competitors 240 915 801 52 2.33

William Lyon Homes presently has a consensus target price of $33.00, suggesting a potential upside of 15.75%. As a group, “Operative builders” companies have a potential downside of 12.40%. Given William Lyon Homes’ stronger consensus rating and higher possible upside, equities research analysts plainly believe William Lyon Homes is more favorable than its competitors.

Institutional and Insider Ownership

82.1% of William Lyon Homes shares are owned by institutional investors. Comparatively, 77.9% of shares of all “Operative builders” companies are owned by institutional investors. 21.3% of William Lyon Homes shares are owned by insiders. Comparatively, 16.0% of shares of all “Operative builders” companies are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

William Lyon Homes has a beta of 1.53, indicating that its stock price is 53% more volatile than the S&P 500. Comparatively, William Lyon Homes’ competitors have a beta of 1.10, indicating that their average stock price is 10% more volatile than the S&P 500.

Profitability

This table compares William Lyon Homes and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
William Lyon Homes 2.68% 10.51% 4.12%
William Lyon Homes Competitors 2.26% 7.08% 5.25%

Earnings and Valuation

This table compares William Lyon Homes and its competitors gross revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
William Lyon Homes $1.80 billion $48.13 million 12.90
William Lyon Homes Competitors $4.16 billion $217.90 million 13.99

William Lyon Homes’ competitors have higher revenue and earnings than William Lyon Homes. William Lyon Homes is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Summary

William Lyon Homes beats its competitors on 8 of the 13 factors compared.

About William Lyon Homes

William Lyon Homes is primarily engaged in the design, construction and sale of single family detached and attached homes in California, Arizona and Nevada. The Company conducts its homebuilding operations through four reportable operating segments: Southern California, Northern California, Arizona and Nevada. For the three months ended March 31, 2012, 37% of home closings were derived from the Company’s California operations. The Company designs, constructs and sells a range of homes designed to meet the needs of each of its markets, although it primarily focuses sales to the entry-level and first time move-up home buyer markets. During the year ended December 31, 2011, the Company marketed its homes through 19 sales locations. In October 2013, the Company purchase 221 homesites at the master-planned Southshore community in Aurora, Colorado.

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