Shares of Ryland Group (NYSE:RYL) were down more than 21% in early afternoon trading Thursday after the company reported a $241.6 million loss for the second quarter late Wednesday that missed Wall Street estimates by a wide margin (-$0.79 consensus estimate vs. -$5.70 actual).

At 1p.m., the stock was trading at $20.92 on heavier-than-normal volume, signaling investor dismay at the second-quarter results. The rest of the builder group was also taking losses on news of the negative existing home sales report and the jump in initial jobless claims, but none were down as far as Ryland. The S&P home builder ETF (AMEX:XHB) was off 7.9% at the same time.

In a research note to investors, Paul Puryear at Raymond James & Associates wrote, "Such a volatile result could prove disappointing to investors hoping for a tapering off of the impairment cycle, but in our view, such losses further evidence our concerns over the reported book values at many other home builders as pricing conditions continue to deteriorate. All told, the 2Q loss lopped off 22% of Ryland's previously stated book value."

Similarly, Michael Rehaut at J.P. Morgan wrote, "While we believe 2Q's charges will bring RYL's total closer in line with its peers, we expect further material charges over the next few quarters, due to our outlook for further home price deflation as well as RYL's continued core operating losses suggesting insufficient charges have been taken so far."

Rehaut also noted that even though Ryland has no outstanding balance on its revolver, its net debt-to-capital ratio increased to 41% from 36.4% at the end of the first quarter.

Not everyone on the street was as negative. David Goldberg at UBS told investors in a note that "despite the [earnings-per-share] miss, operating results this quarter support our bullish thesis on RYL. First, unit orders [were] -19% YOY, ahead of our -30% est., as the company benefited from its Texas exposure, where orders fell just 2%. Additionally, unit backlog was +6% sequentially and now represents 6 months of forward closings. In turn, this provides significant visibility into future results, assuming cancellation rates normalize."

He added, "In our opinion, Ryland's disciplined approach has created an advantage relative to land-heavy peers, as reflected in our forecast that impairments will slow through '08."