Lyon William Homes (NYSE: WLH) and Lennar Corporation (NYSE:LEN.B) are both cyclical consumer goods & services companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.
Volatility and Risk
Lyon William Homes has a beta of 2.14, suggesting that its stock price is 114% more volatile than the S&P 500. Comparatively, Lennar Corporation has a beta of 1.33, suggesting that its stock price is 33% more volatile than the S&P 500.
Lennar Corporation pays an annual dividend of $0.16 per share and has a dividend yield of 0.3%. Lyon William Homes does not pay a dividend. Lennar Corporation pays out 4.6% of its earnings in the form of a dividend.
Earnings and Valuation
This table compares Lyon William Homes and Lennar Corporation’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Lyon William Homes||$1.41 billion||0.67||$59.69 million||$1.53||19.42|
|Lennar Corporation||$10.95 billion||1.07||$911.84 million||$3.47||14.12|
Lennar Corporation has higher revenue and earnings than Lyon William Homes. Lennar Corporation is trading at a lower price-to-earnings ratio than Lyon William Homes, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings for Lyon William Homes and Lennar Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Lyon William Homes||0||2||2||0||2.50|
Lyon William Homes currently has a consensus target price of $27.25, indicating a potential downside of 8.28%. Given Lyon William Homes’ higher probable upside, analysts plainly believe Lyon William Homes is more favorable than Lennar Corporation.
Institutional and Insider Ownership
98.0% of Lyon William Homes shares are owned by institutional investors. Comparatively, 3.2% of Lennar Corporation shares are owned by institutional investors. 22.3% of Lyon William Homes shares are owned by company insiders. Comparatively, 15.0% of Lennar Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
This table compares Lyon William Homes and Lennar Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Lyon William Homes||3.61%||9.33%||3.58%|
Lennar Corporation beats Lyon William Homes on 8 of the 15 factors compared between the two stocks.
About Lyon William 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.
About Lennar Corporation
Lennar Corporation is a provider of real estate related financial services, commercial real estate, investment management and finance company. The Company is a homebuilder that operates in various states. Its segments include Homebuilding East, Homebuilding Central, Homebuilding West, Lennar Financial Services, Rialto and Lennar Multifamily. It is a developer of multifamily rental properties. Its Homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development and sale of residential land. It operates primarily under the Lennar brand name. The Lennar Financial Services segment includes mortgage financing, title insurance and closing services for both buyers of its homes and others. The Rialto segment is a real estate, investment management, and finance company. The Lennar Multifamily segment focuses on developing a portfolio of institutional multifamily rental properties in the United States markets.
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