LGI Homes (NASDAQ:LGIH) and Legacy Housing (NASDAQ:LEGH) Financial Survey

Legacy Housing (NASDAQ:LEGH) and LGI Homes (NASDAQ:LGIH) are both small-cap consumer discretionary companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, risk, earnings, dividends, valuation and profitability.

Analyst Recommendations

This is a breakdown of current ratings for Legacy Housing and LGI Homes, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Legacy Housing	0	4	0	0	2.00
LGI Homes	2	2	2	0	2.00

Legacy Housing presently has a consensus target price of $21.00, suggesting a potential downside of 27.25%. LGI Homes has a consensus target price of $72.75, suggesting a potential upside of 46.08%. Given LGI Homes’ higher probable upside, analysts clearly believe LGI Homes is more favorable than Legacy Housing.

Valuation and Earnings

This table compares Legacy Housing and LGI Homes”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Legacy Housing	$164.57 million	4.17	$41.81 million	$2.17	13.30
LGI Homes	$1.71 billion	0.68	$72.55 million	$2.85	17.47

LGI Homes has higher revenue and earnings than Legacy Housing. Legacy Housing is trading at a lower price-to-earnings ratio than LGI Homes, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Legacy Housing and LGI Homes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Legacy Housing	28.56%	9.53%	8.74%
LGI Homes	3.88%	3.55%	1.88%

Risk and Volatility

Legacy Housing has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500. Comparatively, LGI Homes has a beta of 1.84, meaning that its share price is 84% more volatile than the S&P 500.

Institutional and Insider Ownership

89.3% of Legacy Housing shares are owned by institutional investors. Comparatively, 84.9% of LGI Homes shares are owned by institutional investors. 30.1% of Legacy Housing shares are owned by insiders. Comparatively, 12.6% of LGI Homes shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

LGI Homes beats Legacy Housing on 7 of the 13 factors compared between the two stocks.

About Legacy Housing

Legacy Housing Corporation engages in the building, sale, and financing of manufactured homes and tiny houses primarily in the southern United States. It manufactures and provides for the transport of mobile homes, including 1 to 5 bedrooms with 1 to 3 1/2 bathrooms; and provides wholesale financing to dealers and mobile home parks, as well as retail financing to consumers. The company also offers inventory financing for its independent retailers; consumer financing for its products; and financing to manufactured housing community owners that buy or lease its products for use in their rental housing communities. In addition, it involved in financing and developing new manufactured home communities. The company markets its homes under the Legacy brand through a network of independent retailers and company-owned stores; and directly to manufactured home communities. Legacy Housing Corporation was founded in 2005 and is headquartered in Bedford, Texas.

About LGI Homes

LGI Homes, Inc. designs, constructs, and sells homes. It offers entry-level homes, such as attached and detached homes, and active adult homes under the LGI Homes brand name; and luxury series homes under the Terrata Homes brand name. The company also engages in the wholesale business, which include building and selling homes to large institutions looking to acquire single-family rental properties. It serves customers in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada, West Virginia, Virginia, Pennsylvania, Maryland, and Utah. LGI Homes, Inc. was founded in 2003 and is headquartered in The Woodlands, Texas.