LGIH: guidance reality check

LGIH issued the following guidance when their Q3 2015 was reported:

  • 3250-3400 homes closed in 2015
  • 2015 EPS of $2.45 - $2.65/share

One might assume that the range in EPS is linked to the range in the numbers of homes closed. The first 3 quarters as reported were as follows…

  • 2458 homes closed
  • $1.75 EPS reported

This implies Q4 guidance is as follows…

  • 792-942 homes closed
  • $0.70 - $0.90 EPS

Now, LGIH reports the number of homes closed each month. October had 264 homes closed and November had 249 homes closed. Therefore, to meet the low end of guidance, LGIH will need to close 279 homes in December. To meet the high end of the guidance LGIH will need to close 429 homes.

Here are the 2015/2014 year over year comparisons by month:


	2015	2014	Increase
JAN	153	119	28.6%
FEB	220	156	41.0%
MAR	298	210	41.9%
APR	267	191	39.8%
MAY	255	228	11.8%
JUN	331	243	36.2%
JUL	311	174	78.7%
AUG	320	183	74.9%
SEP	303	200	51.5%
OCT	264	241	9.5%
NOV	249	165	50.9%
DEC	???	246	

The lowest increase was 9.5%. The highest increase was 78.7%. The average increase for the first 11 months was 42.3%. So here are the numbers using the low, high, and average increase for the first 11 months of 2015 versus the first 11 months of 2014:

Low: 269 homes (to meet low guidance, LGIH needs 279 homes)
High: 439 homes (to meet high guidance, LGIH needs 429 homes)
Average: 350 homes (to meet midpoint guidance, LGIH needs 404 homes)

Using recent history as a gauge, it seems likely that LGIH will report within the guidance range.

Chris

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High end of guidance was 429 homes in December. They sold 433. Nice.

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