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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Lgi Homes, Inc. (XNAS:LGIH) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
LGIH
Name:
LGI HOMES, INC. (XNAS:LGIH)
Sector:
- 138780.00K
Industry:
Residential Construction
CEO:
Mr. Eric Lipar
Total Employees:
952
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -278.60% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF LGI HOMES, INC.(LGIH) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND RESIDENTIAL CONSTRUCTION INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
90.82
One Month Price Target:
$91.63
Six Month Price Target :
$95.71
Likely Price in One Year's Time:
Ticker:
$100.59
Likely Trading Range Today Under (Normal Volatility)
$90.32
Price Upper limit ($) :
$91.5
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$83.78
This week:
$75.08
This month :
$59.34
Other Primary facts
Market Cap:
2.07B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
23.27M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
19.89%
-29.79%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$123.47
$108.42
$58.17
$73.22
Medium risk (<10%) entry points
Buy Call
Sell Call
$103.52
Buy Put:
Sell Put:
$100.30
$78.08
$81.34
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
LGIH
Sharpe Ratio:
2.46%
Comparison:
LGIH, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is -1.55% lower than the industry
& ratio is 7.92% higher than the market/S&P 500 average
Average Returns/Yield of
LGIH
Daily returns:
0.10%
Weekly returns:
0.51%
Monthly returns:
2.06%
Yearly returns:
23.00%
Comparison of returns:
Average annual returns/yield (last 3 years) is 7.38% above industry average
Classification:
LGIH, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.95
Statistical test of Returns:
LGIH has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.82%
Weekly Volatility:
8.55%
Monthly Volatility:
17.10%
Yearly Volatility:
59.24%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.79%
Volatility in last five trading days has been -79.25% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-7.75%
Weekly VaR:
-17.33%
Monthly VaR:
-34.66%
How Much Can the price of
LGIH
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-29%
Worst case (decline):
>85%
This translates to price declining to:
$64.05
This translates to price declining to:
$13.62
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
LGIH is a 144.63% riskier investment compared to the market/S&P 500 & is 109.58% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 12.03% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
LGIH
Beta in relation to market/S&P 500--1.60
Expected beta in 1 year's time:
1.118
Expected beta in 3 year's time:
1.581
Unlevered (debt free) Beta:
1.027
Beta in relation to Nasdaq (XNAS):
1.188
Beta in relation to all global stocks::
1.148
Beta Comparison & Analysis
Beta of competitors/peers::
1.449
Beta is 10.47% higher than peers
Average Industry Beta:
1.434
Beta is 11.70% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
36.53%
Sustainable growth rate is 30.46% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.106
Alpha is 5.47% above industry average alpha yield
Alpha is 674% higher than market/& is unsustainably high
Analysis of Cost of Capital of
LGIH
Equity cost of capital:
0.141
Equity cost of capital is 8.86% above industry mean WACC
Unlevered (without debt) cost of capital:
9.06%
Before-tax cost of debt:
-
After-tax cost of debt:
-
Overall debt rating:
-
Weighted average cost of capital (WACC):
-
-
Key Per-Share Metrics & Analysis
Revenue per share:
$124.19
Revenue growth rate per share of (3Y):
1.49
Annual revenue growth rate is 216.15% above the industry average
EPS:
$16.55
Expected Annual growth rate of EPS (3Y):
30.85%
Expected future EPS growth rate is 62.42% higher than the Residential Construction industry
Free cash flow (FCF) per share:
-
-
-
Debt per share
$43.35
EBITDA per share
$22.36
Valuation Analysis Today of
LGIH
P/E Ratio:
5.33
P/E Ratio of Competitors/Peers:
17.87
P/E ratio is -70.17% lower than main peers & is -41.63% lower than the industry
Stock price/value with industry average P/E ratio: $151.18
LGIH is -39.92% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
0.73
Price to sales ratio is -48.59% below the industry mean
P/B (Price to book value ratio):
1.49
-
Price to free cash flow ratio is 134.97% higher than the industry
Net income growth rate (3Y):
154.59%
Net income growth rate is 72.30% higher than the average industry net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
70.92%
Net debt to equity ratio:
67.17%
Debt to assets ratio:
38.89%
Net debt to assets ratio:
36.84%
Debt-to-asset ratio is -3.64% below industry average
Ability to repay debt:
Interest coverage ratio:
-
-
Looking forward:
Debt growth rate:
49.09%
Annual debt growth is 1054% higher than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.593
Statistical significance of correlation:
LGIH has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.555
Stock price is 6.90% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.555
Correlation of price movement with Nasdaq (^IXIC):
-0.028
Covariance of price movement with the market:
-0.063
Kurtosis
8.358
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.919
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
LGIH
Gross Profit Margin Ratio:
109%
Operating Profit Margin Ratio:
18.03%
Operating profit margin is 32.88% higher than the industry
Net Profit Margin Ratio:
109%
Effective Tax Rate:
21.27%
Effective tax rate is 4.34% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
28.72%
Return on equity (ROE) is 0.62% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
15.75%
Return on assets (ROA) is 6.04% higher than the industry
Financial Leverage:
1.6x
Current Ratio:
22.35
Current ratio is 188.25% above industry average
Cash Conversion Cycle (days):
88.7
Cash conversion cycle is 392.53% above industry average
The remaining useful life of property plant & equipment is: 21.9 years
Stock based compensation to net income ratio:
0.87%
In-depth Efficiency Analysis
Revenue generated per employee:
3.0M
Each employee generates 84% more revenue than industry average revenue per employee
EBITDA generated per employee:
546.5K
Each employee generates 68% more EBITDA than industry average revenue per employee
Profit generated per employee:
429.3K
Each employee generates 73% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 145.8K
Each employee generates 473% more free cash flow than industry average revenue per employee
Assets/Capital per employee
164.8K
Each employee generates 473% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
LGIH
VISTEON CORPORATION (XNAS:VC)
Cracker Barrel Old Country Store, Inc. (XNAS:CBRL)
RUSH ENTERPRISES, INC. (XNAS:RUSHA)
QURATE RETAIL, INC. (XNAS:QRTEA)
QURATE RETAIL, INC. (XNAS:QRTEB)
FRONTDOOR, INC. (XNAS:FTDR)
HOVNANIAN ENTERPRISES, INC. (XNAS:HOVNP)
RED ROCK RESORTS, INC. (XNAS:RRR)
DORMAN PRODUCTS, INC. (XNAS:DORM)
Current Analyst Ratings
Strong buy�0%
Buy�8%
Hold�17%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
2.89B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
2.10B
786.49M
-
103.90M
265.52M
161.62M
-
265.52M
-
-
1.21M
520.26M
520.98M
408.67M
519.05M
110.38M
408.67M
Statement of Cash Flow
Date:
Period:
348.00K
Differed Income Tax :
3.26M
Stock Based Compensation :
3.57M
Change in Working Capital :
- 222042.00K
Accounts Receivables:
9.42M
Other Working Capital:
-
Other Non-Cash Items:
- 1613.00K
Net Cash Provided by Operating Activities:
- 137787.00K
Investments in PP&E:
- 993.00K
Net Acquisitions:
- 380.00K
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
53.33M
-
53.33M
48.49M
2.34B
-
2.44B
19.42M
12.02M
-
-
2.93M
122.48M
156.85M
-
2.59B
76.09M
-
28.92M
-
32.97M
109.05M
1.01B
53.45M
1.06B
-
1.17B
271.00K
1.44B
-
-
March 31, 2022 at 6:00:00 AM
2.37B
1.42B
2.59B
-
1.01B
955.7M
-
-
- 1373.00K
-
2.01M
- 57659.00K
-
197.62M
141.97M
-
2.81M
53.33M
50.51M
- 137787.00K
- 993.00K
- 138780.00K
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
LGIH
2023
2024
2025
2026
2027
$101.09
$208.79
$231.25
$256.14
$283.70