LGIH - Embedded Expectations Analysis - 2018 03 05
ï€ LGI Homes (LGIH:USA) currently trades below corporate averages relative toUAFRS-based (Uniform) Earnings, with a 13.3x Uniform P/E, implying bearish expectations for the firm. While negative management sentiment suggests the potential for near-term headwinds, market expectations are overly bearish in the context of the firm's historical performance and current homebuilding tailwinds, implying long-term equity upside remains warranted
ï€ Specifically, although management appears concerned about performance, guidance, and costs, market expectations for record-low Uniform ROA are still too bearish given the firm's historical performance and current homebuilding tailwinds. Should the firm simply maintain Uniform ROA at current levels, multiple expansion and equity upside would be warranted
LGI Homes is a holding company. Through its subsidiaries, the company is engaged in the design, construction, and sale of new homes in markets in Texas, Arizona, Florida, Georgia, New Mexico, South Carolina, North Carolina, Colorado, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, and Nevada. The company's product offerings include entry-level homes, including both detached homes and townhomes, and move-up homes sold, which are sold under its LGI Homes brand, and its luxury series homes, which are sold under its Terrata Homes brand. The company's homebuilding operations are organized and managed by seven divisions: West, Northwest, Central, Midwest, Florida, Southeast and Mid-Atlantic.
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