Lyon William Homes (NYSE: WLH) and Meritage (NYSE:MTH) are both construction companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, dividends, risk, institutional ownership, profitability, analyst recommendations and valuation.
This is a summary of recent recommendations and price targets for Lyon William Homes and Meritage, 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 presently has a consensus target price of $27.25, suggesting a potential downside of 5.84%. Meritage has a consensus target price of $41.63, suggesting a potential downside of 18.46%. Given Lyon William Homes’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Lyon William Homes is more favorable than Meritage.
Valuation and Earnings
This table compares Lyon William Homes and Meritage’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Lyon William Homes||$1.41 billion||0.66||$59.69 million||$1.53||18.92|
|Meritage||$3.03 billion||0.68||$149.54 million||$3.78||13.51|
Meritage has higher revenue and earnings than Lyon William Homes. Meritage 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 table compares Lyon William Homes and Meritage’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%|
Volatility & Risk
Lyon William Homes has a beta of 1.81, indicating that its share price is 81% more volatile than the S&P 500. Comparatively, Meritage has a beta of 1.53, indicating that its share price is 53% more volatile than the S&P 500.
Insider and Institutional Ownership
98.1% of Lyon William Homes shares are held by institutional investors. Comparatively, 98.2% of Meritage shares are held by institutional investors. 21.3% of Lyon William Homes shares are held by insiders. Comparatively, 5.6% of Meritage shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Meritage beats Lyon William Homes on 8 of the 14 factors compared between the two stocks.
Lyon William Homes Company Profile
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.
Meritage Company Profile
Meritage Homes Corporation operates as a holding company. The Company is a designer and builder of single-family homes. The Company operates through two segments: homebuilding and financial services. The homebuilding segment is engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes, and providing warranty and customer services. It builds homes in the regions of the United States and offers a range of homes that are designed for a range of homebuyers, including first-time, move-up, active adult and luxury. As of December 31, 2016, it had homebuilding operations in three regions: West, Central and East, which were consisted of nine states: Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina and Tennessee. It also operates Carefree Title Agency, Inc. (Carefree Title) company. Carefree Title’s core business includes title insurance and closing/settlement services it offers to its homebuyers.
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