LGI Homes (NasdaqGS:LGIH) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

LGI Homes, Inc. (NasdaqGS:LGIH) is scheduled to report Q3 earnings results before markets open for trading on November 3, 2020.

The company is expected to report earnings of $2.16/share on revenue of $516.1 million. The consensus earnings per share (EPS) of $2.16/share is based on a poll of 5 analysts and represents a growth in eps of 11.7% over the same quarter last year, when the company reported earnings of $1.93/share.

The revenue forecast of $516.1 million based on a poll of 5 analysts implies a year-over-year (YoY) growth in revenue of 6.8%. Last year the company reported $483.1 million in revenue for the quarter.

Expected to report EPS growth of 11.7% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $516.10 $483.08 6.8%
EPS $2.16 $1.93 11.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from LGI Homes, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.69 $2.21 31.0% Beat
Q1, 2020 $1.25 $1.67 33.6% Beat
Q4, 2019 $2.42 $2.52 4.3% Beat
Q3, 2019 $1.89 $1.93 1.9% Beat
Q2, 2019 $1.63 $1.82 12.0% Beat
Q1, 2019 $0.91 $0.75 −17.4% Missed
Q4, 2018 $1.78 $1.74 −2.0% Missed
Q3, 2018 $1.54 $1.64 6.0% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −1.3%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 4, 2020 $118.21 $116.66 −1.3% Decline
May 5, 2020 $62.47 $66.67 6.7% Increase
February 25, 2020 $93.08 $77.53 −16.7% Decline
November 5, 2019 $75.51 $74.65 −1.1% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −1.85, the model suggests that the company is a possible earnings manipulator. A value of −1.85 implies a 3.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

LGI Homes, Inc. is currently trading at $113.71/share, up 0.5% for the day. The company is trading at approximately 84.9% of its 52-week high of $132.98/share. The company’s stock price is down −2.5% since the last earnings report and down −4.0% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 43.01 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:LGIH Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 13.27 and a forward P/E multiple of 11.92.

LGI Homes, Inc.’s current share price also implies a price-to-book (P/B) multiple of 3.07. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $113.71
P/E Ratio 13.3x
P/E Ratio (Fwd) 11.9x
PEG Ratio 0.3
Total Debt / Total Capital 17.3%
Levered Free Cash Flow $122.1 million
EV / EBITDA 12.3x

Finbox

LGI Homes, Inc. is a mid-cap stock with a market capitalization of $2.839 billion and a total enterprise value of $3.384 billion. The company operates in the Consumer Discretionary sector and the Household Durables industry.

LGI Homes, Inc. designs, constructs, and sells homes in the United States. It offers entry-level homes, such as detached and attached homes, and move-up homes under the LGI Homes brand name; and luxury series homes under the Terrata Homes brand name. As of March 31, 2020, it owned 113 communities. The company serves in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada, and West Virginia. LGI Homes, Inc. was founded in 2003 and is headquartered in The Woodlands, Texas.

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