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alstry (35.03)

Analysts REALLY Lying on RYL

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15

April 28, 2008 – Comments (3)

Current analyst estimates for RYL's revenues next quarter is about $558 million or down only 24.6% from last year.

http://finance.yahoo.com/q/ae?s=RYL

With backlog down over 38% from last year and spec count down EVEN MORE....absent an extraordinary land sale(which is not factored in analyst's estimates), it would be impossible for RYL's revenues to be down less than 25%.

As a matter of fact, with the lower spec count, it is likely that RYL's revenues will be down at least 40-45% factoring the slower selling environment and lower sales prices.

What is amazing is this stuff is so simple.  A HB can only generate operating revenues from backlog and specs.  Specs can be converted to cash immediately and backlog converts once the house is built and delivered, subject to cancellation of course.

If RYL generates $400 million in revenues next quarter, it would be an accomplishment.  But that would destroy the analysts current projections and any chance the company has for rasing cash at an inflated stock price.

No wonder the CEO just dumped another 80,000 shares a few days ago.  Now that the company likely needs cash to build out backlog, expect the pumping to begin.

 

3 Comments – Post Your Own

#1) On April 28, 2008 at 10:29 AM, StKitt (30.39) wrote:

Hard to lay off of this as a great shorting opportunity.

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#2) On April 28, 2008 at 3:56 PM, cubguy1 (< 20) wrote:

Price/Book on Ryland is ridiculously high in this RE environment.

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#3) On April 28, 2008 at 4:21 PM, alstry (35.03) wrote:

Everything is too high if you were going to value RYL as a business in the current environment.  Why do you think Drier is dumping so many shares.

Based on the fact it is all the analysts coming out with ridiculously high estimates, most experts now saying no chance of recovery until 2009, and record distressed inventory coming to market month after month, it seems almost certain that the analysts are working jointly or at least discussing their estimates with each other.

It would not be possible to get 10 random analysts ALL missing HIGH and by such large amount unless they were conferring with each other to intentionally deceive.

There is little doubt that this analysis is negligent, the question now is whether it is criminal.

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