Century Communities (NYSE: CCS) and Lyon William Homes (NYSE:WLH) are both small-cap construction companies, but which is the better business? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitabiliy, valuation, analyst recommendations and dividends.
Analyst Recommendations
This is a breakdown of recent ratings for Century Communities and Lyon William Homes, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Century Communities | 0 | 0 | 3 | 0 | 3.00 |
| Lyon William Homes | 0 | 2 | 1 | 0 | 2.33 |
Century Communities currently has a consensus target price of $29.00, indicating a potential upside of 20.08%. Lyon William Homes has a consensus target price of $23.75, indicating a potential upside of 7.61%. Given Century Communities’ stronger consensus rating and higher probable upside, analysts clearly believe Century Communities is more favorable than Lyon William Homes.
Profitability
This table compares Century Communities and Lyon William Homes’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Century Communities | 4.87% | 11.03% | 5.14% |
| Lyon William Homes | 2.90% | 7.35% | 2.68% |
Volatility & Risk
Century Communities has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500. Comparatively, Lyon William Homes has a beta of 1.76, indicating that its share price is 76% more volatile than the S&P 500.
Earnings & Valuation
This table compares Century Communities and Lyon William Homes’ top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Century Communities | $1.04 billion | 0.51 | $76.56 million | $2.40 | 10.06 |
| Lyon William Homes | $1.40 billion | 0.50 | $88.95 million | $1.05 | 21.02 |
Lyon William Homes has higher revenue and earnings than Century Communities. Century Communities 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.
Insider and Institutional Ownership
66.8% of Century Communities shares are owned by institutional investors. 23.2% of Century Communities shares are owned by company insiders. Comparatively, 21.3% of Lyon William Homes shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Summary
Century Communities beats Lyon William Homes on 10 of the 14 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.
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