LGIH reports Feb closings

232 homes closed in January, up 51.6% from 153 in January last year.
245 homes closed in February, up 11.4% from 220 in February last year.
477 homes closed in the two months, up 27.9% from 373 last year.

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245 homes closed in February, up 11.4% from 220 in February last year.

Although they sold a similar number of houses in the first two months, February’s number with an increase of 11% over last year is a bit lower than the 51% increase that they reported for January. Is this why the stock is down ~5% today?

Although they sold a similar number of houses in the first two months, February’s number with an increase of 11% over last year is a bit lower than the 51% increase that they reported for January. Is this why the stock is down ~5% today?

I would imagine.

Obviously a buying opportunity, as monthly fluctuations are largely noise…and here are some numbers explaining why.

January was an “easier comp” than February this year. When you look at the last couple years, January had an impressive 45% increase in 2014, and a solid 29% increase in 2015. But February had an incredible 184% increase in 2014 and another large 41% increase in 2015.

All this means is, the astronomical growth happened that in February the last couple years made it nigh-impossible for LGIH to reproduce that in 2016. They were simply starting from a higher mark. January just had a different history.

Also, the two months with the lowest growth in 2015 were May and Oct. You guessed it: in 2014 the increases for those months were huge – 59% and 90% respectively.

As I said above, these monthly mathematical anomalies are noise and don’t really mean anything for the general trend of LGIH, which I am still incredibly bullish on. The fact is they grew closings by double digits, both YoY and vs January! (Also, did anyone mention on this board that they announced on Twitter this Tuesday that they’ve just entered the Seattle market?)

Just my opinion of course, but a smaller beat for Feb than Jan doesn’t mean anything, or bother me in the slightest.

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For the full year (2016), LGIH has guided an increase of 17.5% in the number of homes sold over 2015. That’s 3404 in 2015 compared to 4000 guided for 2016. The company seems to be on track (so far) to beat their guidance and we may hear more when they report earnings next week.

Chris

232 homes closed in January, up 51.6% from 153 in January last year.
245 homes closed in February, up 11.4% from 220 in February last year.
477 homes closed in the two months, up 27.9% from 373 last year.

Last year they closed almost three hundred (298) in March, or 44% of all the closings in the quarter. If they close only 40% in March this year, that will give them 318 in the month (up 7%), and 795 total for the quarter, up 18.5% from 671. Revenue will be up more as the average price is higher.

If the increased closings in March is a winter-is-over factor, and they close the same 44% in March again, they’ll close 375 in the month (up 26%) and 852 in the quarter, up 27%. Again, revenue will be up more than that.

They’ll probably come in between the two.

They currently have a PE of 11 (that’s eleven).

Saul

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I noticed this morning, the 11.4% rise in home closings for Feb and the contrary fact that the stock is down today.

Then I come over to this board and I see the encouraging posts addressing this.

I have a 6.4% position with this company now and have been enjoying the returns since my inception date. Thinking of adding a little today.

I am just starting to get comfortable with owning a couple of stocks (including LGIH) that aren’t discussed on the MF boards.

Thanks,
Frank

Added more to LGIH.

The fact is they grew closings by double digits, both YoY and vs January!

Just a small correction (I’m a numbers guy), growth vs Jan 2016 wasn’t double digit (245, up from 232), it is 5.6%.

That said, I agree with your post, that the smaller growth in Feb YOY compared to Jan YOY is meaningless at this point, and was most probably caused by the factors you brought up of tough comps for previous Febs.

I’ve been in LGIH and think this company has some great potential.