Critical Analysis: Ryland Group (RYL) versus Green Brick Partners (GRBK)

Ryland Group (NYSE: RYL) and Green Brick Partners (NASDAQ:GRBK) are both small-cap homebuilding – nec companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.

Risk and Volatility

Ryland Group has a beta of 1.6, meaning that its share price is 60% more volatile than the S&P 500. Comparatively, Green Brick Partners has a beta of 1.79, meaning that its share price is 79% more volatile than the S&P 500.

Earnings & Valuation

This table compares Ryland Group and Green Brick Partners’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ryland Group N/A N/A N/A $3.26 12.52
Green Brick Partners $380.33 million 1.50 $23.75 million $0.64 17.58

Green Brick Partners has higher revenue and earnings than Ryland Group. Ryland Group is trading at a lower price-to-earnings ratio than Green Brick Partners, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Ryland Group and Green Brick Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ryland Group 6.52% 14.91% 5.79%
Green Brick Partners 7.05% 12.07% 8.95%

Analyst Recommendations

This is a breakdown of current ratings for Ryland Group and Green Brick Partners, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ryland Group 0 0 0 0 N/A
Green Brick Partners 0 0 0 0 N/A

Insider & Institutional Ownership

79.7% of Green Brick Partners shares are held by institutional investors. 53.5% of Green Brick Partners shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Green Brick Partners beats Ryland Group on 7 of the 9 factors compared between the two stocks.

About Ryland Group

The Ryland Group, Inc. is a homebuilder and a mortgage-finance company. RMC Mortgage Corporation and its subsidiaries (RMCMC) and Ryland Mortgage Company provides mortgage financing and related services for more than 255,000 homebuyers. The Company consists of six reportable segments: four geographically determined homebuilding regions; financial services, and corporate. The Company’s business is conducted and located in the United States, and its operations span all aspects of the homebuying process from design, construction and sale to mortgage origination, title and escrow services. The Company generally builds homes for entry-level buyers and first and second-time move-up buyers. The financial services segment provides mortgage-related products and services, as well as title and escrow services, to its homebuyers. Corporate is a non-operating business segment, which is engaged in supporting operations.

About Green Brick Partners

Green Brick Partners, Inc. operates in the real estate industry. The Company operates through two segments. The builder operations segment includes its controlled builders results, which include building and selling single-family detached homes and townhomes that are designed and built to meet local customer preferences, and the sale of lots. Builder operations consist of three operating segments: Texas, Georgia, and corporate and other. Corporate operations segment develops and implements strategic initiatives and supports its builder operations and land development by centralizing certain administrative functions, such as finance, treasury, information technology and human resources. The land development segment includes operations related to the acquisition and development of land, which is sold to its controlled builders and third-party homebuilders. As of December 31, 2016, it had owned or controlled over 5,200 home sites in various locations in the Dallas and Atlanta markets.

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