LGIH reports Q2

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EPS $1.90 beating estimates by $0.22, raised FY18 estimates.

LGI Homes reported Q2 results before market opened on Tuesday. Y-o-Y TTM revenue increased 56.1%. Y-o-Y TTM eps increased from $4.32 to $5.83, and increase of 54.2%. Share price increased Tuesday from $50.05 to $55.20 for a p/e of 9.5 and a 1YPEG of 0.17. LGIH raised eps guidance for FY18 from a range of $6 to $7 to a range of $6.50 to $7.25. Taking a mid-range eps of $6.87, this is a forward PEG of 0.18.

I added a small amount of LGIH on Monday when the price dropped to $48.94 but a limit order at $48.48 did not fill. Lots of good info on the conference call about the purchase of Wynn Homes assets and the long range plan to reach 240 selling communities (from current 81) to become a top 5 home builder based on houses sold. Revenue growth has been from the multiple of homes sold and increase of average selling price while gross margin steady (increased sequentially) and SG&A decreasing due to scale. Demand strong and cost increases being passed on to buyers.

Might be worth a look.

KC, long LGIH

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The market pretty much just returned to the price from two weeks ago. I think it’s going to take a couple more quarters before the price reaches a more sensible valuation when it becomes clear that things like tariffs won’t have much of an impact on their bottom line.