Shares of Ryland Group Inc., one of the nation's 10 largest home builders, rose more than 7% on Thursday after the company reported strong fourth-quarter earnings fueled by the hot housing market.
Calabasas-based Ryland Group said net income rose 50% to $67.5 million, or $2.50 a share, from $44.9 million, or $1.61, in the year-ago period. Revenue was up 12% to $929.7 million.
For the year, net income hit $185.6 million, or $6.64 a share, a 40.5% increase from the $132.1 million, or $4.63, generated in 2001. Annual revenue rose 4.7% to $2.88 billion. The company also increased its profit target for 2003.
The quarterly and annual results easily beat Wall Street expectations. Ryland Group shares closed at $39.60, up $2.63, on the New York Stock Exchange.
Ryland Group, which builds primarily entry-level homes in 25 states, said fourth-quarter orders for homes rose more than 6% from year-ago levels to 2,778. Orders in December were up 20% on a year-over-year basis. The average price of homes completed and delivered to buyers in the quarter rose to $217,000 from $211,000 on a year-over-year basis.
Ryland Group Chairman and Chief Executive R. Chad Dreier said the company would increase its construction activity this year to about 15,000 homes, compared with about 13,100 last year. Demand for new housing is expected to remain strong. He also raised the company's estimated annual profit for 2003 by about 9% to $7.25 a share.
"As long as there are restrictions on land supply, prices are not going to cool down," Dreier said in an interview. "We feel pretty good about the next couple of years."