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On Friday, B.Riley initiated coverage on Legacy Housing Corp. (NASDAQ: LEGH), assigning the stock a Neutral rating and setting a price target of $26.00. According to InvestingPro data, the company maintains a "GOOD" overall financial health score and holds more cash than debt on its balance sheet. Legacy Housing, known for its manufacturing, retailing, and lending of HUD-code and tiny homes, has faced challenges recently, including a decline in U.S. manufactured housing market share during the 2023-2024 period. Despite a strong fourth quarter in 2024, the company saw a significant drop in unit shipments year-over-year in the first quarter of 2025.
Legacy Housing’s recent performance has been a mixed bag, with a 36% year-over-year decrease in unit shipments in the first quarter of 2025, attributed in part to delayed community orders. This setback has affected the company’s stock value, which trades at a P/E ratio of 10.3x and price-to-book ratio of 1.13x. InvestingPro analysis shows the stock is currently trading near its Fair Value, with additional metrics available to subscribers. However, the firm’s solid balance sheet, characterized by net cash and a self-funded loan book with attractive interest rates, provides some financial stability.
The company’s future, according to B.Riley, hinges on its ability to simplify its product line, expand its dealer network, refocus on park customers, and monetize its non-core land assets. These strategic moves are expected to help Legacy Housing regain market share and improve gross margins in the latter half of 2025 and into 2026.
B.Riley’s base case forecasts for Legacy Housing include earnings per share (EPS) of $2.31 and $2.60 for the fiscal years 2025 and 2026, respectively. The company maintains strong profitability with a gross margin of 46% and return on equity of 12%. The price target of $26 is based on a price-to-earnings (P/E) ratio of 10 times the estimated earnings, which closely aligns with the stock’s current trading price. For deeper insights into Legacy Housing’s valuation and growth prospects, access the comprehensive Pro Research Report available on InvestingPro. The firm acknowledges the potential for Legacy Housing to rebound but maintains a cautious stance, awaiting evidence of sustained volume recovery and clarity on the company’s ability to capitalize on its land assets.
In other recent news, Legacy Housing Corporation (NASDAQ:LEGH) reported its first-quarter 2025 financial results, which fell short of market expectations. The company announced earnings per share (EPS) of $0.43, below the projected $0.59, and revenue of $35.7 million, missing the forecasted $44.13 million. Product sales decreased by 21.2% year-over-year, although net revenue per product sold increased by 23.1%. Despite these challenges, the company saw an increase in its cash balance to $3.4 million from $1.1 million. Analysts have not made any public upgrades or downgrades following the earnings release. Legacy Housing’s management remains optimistic about the future, with plans to sell lots in its Bastrop County development this summer. The company is also implementing changes to its product line and financing program to address current market conditions. These developments come amid broader industry challenges, including supply chain disruptions and macroeconomic pressures.
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