Tuesday, Legacy Housing Corp. (NASDAQ:LEGH) received an updated price target from B.Riley, increasing it to $25.00 from the previous $22.00 while maintaining a Neutral rating on the stock.
The adjustment follows Legacy Housing's call on May 10, 2024, where they discussed their first-quarter results for the year. The company reported revenues that met expectations and a record gross margin leading to earnings per share (EPS) of $0.60, which surpassed the estimated $0.38.
The report from the call highlighted that despite a year-over-year decline of 20% in the number of home sections sold, the average price per section only fell by 11% to $47,800. This marks a significant recovery from the fourth-quarter average selling price (ASP) per section of $35,600 and exceeded analyst projections. Legacy Housing's management has been concentrating on increasing the company's book value, which has grown by 13% compared to the previous year.
In the first quarter, Legacy Housing also initiated a share repurchase for the first time since 2020. B.Riley has responded to these developments by revising its estimates upward and raising the price target for Legacy Housing's stock.
The firm notes that Legacy Housing has consistently been a reliable creator of value, with a history of annual book value growth in the teens percentage range. The recent share buybacks also contribute to a level of confidence and provide some protection against downside risks.
The analyst from B.Riley indicated that a more positive stance on Legacy Housing might be taken if there is evidence of sustained improvement in gross margins beyond the one-time positive impact seen this quarter, consistent improvement in unit sales, and realization of potential value from the company's various development properties.
These factors are being closely monitored as indicators of the company's ongoing performance and potential for growth.
InvestingPro Insights
Following the upbeat assessment by B.Riley, Legacy Housing Corp. (NASDAQ:LEGH) has demonstrated a robust financial performance with a P/E ratio of 10.62 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at a similar 10.58, reflecting a stable valuation relative to earnings. The company's market capitalization stands at $560.01M, indicating its size and presence in the market. Despite a revenue decline of 28.17% over the last twelve months as of Q1 2024, Legacy Housing has maintained a high gross profit margin of 49.2%, which supports the analyst's recognition of the company's impressive gross margin in the recent quarter.
InvestingPro Tips highlight that analysts have recently revised their earnings upwards for the upcoming period, aligning with B.Riley's positive adjustment. Additionally, the stock has experienced a significant return over the last week, at 8.68%, and over the last month, at 13.28%, which may interest investors looking for recent positive price movements. These returns could be indicative of the market's reaction to the company's first-quarter performance and strategic initiatives such as share repurchases.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available for Legacy Housing, which provide further insights into the company's financial health and market performance. To explore these insights, visit https://www.investing.com/pro/LEGH and consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of information to inform your investment decisions.
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