NVR (NYSE: NVR) and Lyon William Homes (NYSE:WLH) are both cyclical consumer goods & services companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, profitability, dividends, analyst recommendations, earnings, institutional ownership and valuation.

Profitability

This table compares NVR and Lyon William Homes’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NVR 9.22% 38.23% 19.86%
Lyon William Homes 3.61% 9.33% 3.58%

Analyst Ratings

This is a summary of current ratings and target prices for NVR and Lyon William Homes, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NVR 0 3 2 0 2.40
Lyon William Homes 0 2 2 0 2.50

NVR presently has a consensus price target of $2,645.00, indicating a potential downside of 22.22%. Lyon William Homes has a consensus price target of $27.25, indicating a potential downside of 5.90%. Given Lyon William Homes’ stronger consensus rating and higher probable upside, analysts plainly believe Lyon William Homes is more favorable than NVR.

Insider & Institutional Ownership

78.5% of NVR shares are held by institutional investors. Comparatively, 98.1% of Lyon William Homes shares are held by institutional investors. 11.3% of NVR shares are held by insiders. Comparatively, 22.3% of Lyon William Homes shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares NVR and Lyon William Homes’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NVR $5.71 billion 2.23 $425.26 million $136.16 24.97
Lyon William Homes $1.41 billion 0.66 $59.69 million $1.53 18.93

NVR has higher revenue and earnings than Lyon William Homes. Lyon William Homes is trading at a lower price-to-earnings ratio than NVR, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

NVR has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500. Comparatively, Lyon William Homes has a beta of 1.81, suggesting that its stock price is 81% more volatile than the S&P 500.

Summary

NVR beats Lyon William Homes on 8 of the 13 factors compared between the two stocks.

NVR Company Profile

NVR, Inc. is engaged in the construction and sale of single-family detached homes, townhomes and condominium buildings. The Company’s segments are Homebuilding Mid Atlantic, Homebuilding North East, Homebuilding Mid East, Homebuilding South East and Mortgage Banking. Its Homebuilding Mid Atlantic segment operates in various geographic regions, which include Maryland, Virginia, West Virginia, Delaware and Washington, District of Columbia (D.C.). Its Homebuilding North East segment operates in various geographic regions, which include New Jersey and Eastern Pennsylvania. Its Homebuilding Mid East segment operates in various geographic regions, which include New York, Ohio, Indiana and Illinois, The Homebuilding South East segment operates in various geographic regions, which include North Carolina, South Carolina, Florida and Tennessee. The Mortgage Banking segment provides mortgage-related services to home building customers through its mortgage banking operations.

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.

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