LGIH
LGI Homes, Inc.
$44.18
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Undervalued
Trading 75.6% below fair value
You pay
$44.18
Bear
$140.73
Fair
$180.94
Bull
$221.14
Bear
$140.73
+218.6%
$10.05 × 14x
Fair
$180.94
+309.6%
$10.05 × 18x
Bull
$221.14
+400.6%
$10.05 × 22x
Adjust Assumptions
18.0x
10.05$
Key Value Driver
Through-cycle normalized EPS ($10.05)
Implied Market Multiple
4.4x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (13 analysts)
$88.80
Divergence from AlphaVal
104%
Summary
Using 7-year normalized EPS of $10.05 at a 18x cycle multiple, the base-case value is $180.94 per share. P/TBV cross-check: 0.5x.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Price-to-book value of 0.5x is below the typical low point. This could be a bargain, but check whether asset write-downs are coming.
Wall Street's average price target is $88.80 (from 13 analysts). Our estimate is 104% above the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing