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Have you been paying attention to shares of LGI Homes (LGIH)? Shares have been on the move with the stock up 12.1% over the past month. The stock hit a new 52-week high of $173.38 in the previous session. LGI Homes has gained 62.6% since the start of the year compared to the 16.5% move for the Zacks Finance sector and the 28.1% return for the Zacks Real Estate - Development industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 23, 2021, LGI Homes reported EPS of $5.18 versus consensus estimate of $3.93 while it beat the consensus revenue estimate by 8.02%.
For the current fiscal year, LGI Homes is expected to post earnings of $12.03 per share on $2.64 billion in revenues. This represents a 3.8% change in EPS on a 11.7% change in revenues. For the next fiscal year, the company is expected to earn $13.28 per share on $2.93 billion in revenues. This represents a year-over-year change of 10.42% and 10.65%, respectively.
LGI Homes may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
LGI Homes has a Value Score of C. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 14.3X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 14.7X versus its peer group's average of 13.8X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, LGI Homes currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if LGI Homes fits the bill. Thus, it seems as though LGI Homes shares could have potential in the weeks and months to come.
How Does LGI Homes Stack Up to the Competition?
Shares of LGI Homes have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Agile Property Holdings (AGPYY), CBRE Group (CBRE), and FirstService (FSV), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 31% of all the industries we have in our universe, so it looks like there are some nice tailwinds for LGI Homes, even beyond its own solid fundamental situation.
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LGI Homes, Inc. (LGIH) : Free Stock Analysis Report
FirstService Corporation (FSV) : Free Stock Analysis Report
Agile Property Holdings Ltd. (AGPYY) : Free Stock Analysis Report
CBRE Group, Inc. (CBRE) : Free Stock Analysis Report
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