Smaller Is Cheaper for U.S. Homebuilders, Signaling Deals
Smaller U.S. homebuilders are cheap enough relative to larger peers to suggest that more deals may follow Lennar Corp.’s $643 million takeover offer for WCI Communities Inc. last week, according to Will Randow, a Citigroup Inc. analyst. Randow compared the industry segments’ share prices relative to book value, or the value of assets after subtracting liabilities, in a report Monday. The price-to-book ratio for the Russell 2000 Homebuilding Index was 33 percent lower on Monday than the comparable ratio for the industry’s Russell 1000 index, according to data compiled by Bloomberg.