Homebuilder Ryland Group moves to profit in 3Q
LOS ANGELES -- Ryland Group Inc. said Wednesday it returned to a profit in the third quarter, as the homebuilder sold more homes and benefited from higher prices.
The results trumped Wall Street's expectations, sending shares in the Westlake Village, Calif., company up more than 5 percent in after-hours trading.
Ryland, ranked the nation's eighth-largest homebuilder last year, said completed sales jumped 37 percent versus the same quarter last year to 1,312 homes. And contracts for new homes vaulted nearly 56 percent to 1,500.
The builder also ended the quarter with a backlog of 2,465 homes under contract, an increase of 58 percent from a year earlier.
The positive sales trends reflect overall improving demand for new homes this year _ a marked turnaround from last year, when new home sales sank to a record low.
New home sales are up 27.1 percent nationally this year. They climbed 5.7 percent last month to a seasonally adjusted annual rate of 389,000, the highest level in more than two years.
Many economists anticipate sales will continue improving, thanks in part to rising home values, low mortgage interest rates and a tighter supply of homes for sale in many markets after years of depressed home construction.
But a slowing economy, still-high unemployment and the threat of a severe downturn in Europe are expected to slow the pace of a full housing recovery for several years.
Even so, fortunes have clearly begun to turn around for builders like Ryland.
The company reported net income of $10.6 million, or 22 cents per share, for the three months ended Sept. 30. That compares with a loss of $21.3 million, or 48 cents per share, in the same quarter last year.
Revenue grew 44 percent to $358.7 million from $248.6 million a year earlier.
Analysts' consensus forecast called for earnings of 17 cents per share on $348.2 million in revenue, according to FactSet.
Rising sales helped boost the average closing price of a Ryland home by nearly 5 percent to $264,000 for the quarter.
The builder's open communities also increased, rising 11.4 percent to 235 at the end of the quarter.
Ryland shares ended the regular session up 48 cents at $32.79. The stock gained $1.71, or 5 percent, to $34.50 in extended trading. So far this year, Ryland shares are up more than twofold.