I made my projection of 2017 earnings, $4.81 per share. With a forward looking p/e of 10.5 that is $50.51 a share. What the forward looking projection will be at year end, I don’t know. But I think the $50.51 is fair value as of today.

For background, I gathered the following information from my E*Trade account:

5 analysts, FY 2017 estimates:

Revenue, 1.18B mean, 1.28B high, 1.08B low.

EPS, $4.176 mean, $4.90 high, $3.93 low.

Price targets, 12 months, $41.80 mean, $48.00 high, $39.00 low.

The forward p/e is 10.6 and trailing p/e 13.8 which are low, as usual, based on 47% debt to capital and -$292.8% cash operating cash yield.

I am projecting 5,400 closings at $221,000 average sales price for revenue of $1.193B.

I used 73.56% cost of sales, same as last year; 7.6% selling, down from 7.99%; 4.9% G&A, down from 5.15%; and tax rate 4.9%, up from 4.6%.

Net income $107,828K and 22.4 millionl shares and $4.81 earnings per share.

Applying a 10.5 p/e as a trailing 12-month p/e, fair value is $50.51.

But, if analysts catch up to $4.81/share for fy2017, and if LGIH continues to perform, one could expect a forward p/e of 13.5 x trailing 12-month earnings, and that is $64.94 year end price target.

A quick look at Q2 earnings… $1.30. I see the high estimate is $1.36 so that difference is probably average selling price estimate.

Anyway, Friday’s closing price was $47.44 versus the $50.51 and $64.94 values so I am relatively comfortable with LGIH as my top holding. It is 14% of my IRA plus brokerage accounts so I will consider adding some amount.

Comments???

KC