What kind of projections LGIH has for this quarter? Are the winter quarter be good for home builders? Where do you expect LIGH in next 5 years?
Hi Goran, The conference call where they announce such things are available to everyone. You can read it just like me. It’s important to do so. Here’s what they said:
We believe we will close about the same number of homes in November as in October
Sequentially our average sales price increased over 4%. We believe it will continue to increase for the rest of the year.
We expect our adjusted gross margin will continue to be strong.
We continue to believe basic earnings per share will be in the range of $3.20 to $3.70 for the year.
We believe LGI will one day have a presence in the majority of the top 50 markets in the US. As we progress toward achieving this goal, I’m excited to announce that we’ve our first project under contract in Minneapolis. The test marketing results are looking great. We plan to continue to look at acquisitions in this market and we anticipate our first home closing in late 2017 or early 2018. In addition, we are actively looking for opportunities to begin operations in the Las Vegas market in 2017 as well.
We expect to increase our community count by at least 20% during 2017. Our gross margin, overall absorptions, and SG&A as a percent of revenue will generally remain consistent into the next year.
We do not believe that competition is going to have an effect on LGI operationally. We won’t be changing our closing forecast or absorption pace based on increased competition because we think it’s very favorable market out there. So it’s all positive for us.
We closed just 249 last November which is going to make for a very easy comp this month. December which was the best month we ever had at 433 is going to be tougher comp. January and February closings will be substantially lower compared to the other because closings in Jan and Feb are is based on sales that were made between November 15 and Jan 15, which includes a lot of holidays (T’Giving, Xmas, New Years). So historically December is very strong for us and then January and February are weaker as far as closings go.
As far as where they’ll be in five years, I truly haven’t a clue. I suspect that they’ll be a lot larger than now, but home building is an industry that depends on the economy, and I don’t know where the economy will be in 5 years.
Saul