Current Price: $27.02
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Ticker: LGIH
Current Price: $27.02
52 week High: 30.17
52 week Low: 12.21
Shares Out: 19.91 million
Public Float: 14.01 million
Market Cap: $536.93 million
PE Ratio: 16.45
Price to Sales: 1.17
Company Overview
LGI Homes (Nasdaq: LGIH) is one of the nation’s fastest growing homebuilders engaged in the design and construction of entry-level homes across Texas, Arizona, New Mexico, Florida, Georgia, North Carolina, South Carolina and Colorado. Since commencing operations in 2003, the company has constructed and sold over 9,000 quality homes.
On September 2, LGI Homes announced 320 homes closed inAugust 2015, up from 183 home closings inAugust 2014, representing year-over-year growth of 74.9%. As of the end ofAugust 2015, the company had 49 active selling communities.
Strong Growth
The company focuses on entry level homebuyers and is profitable every year since inception. LGI Homes showed its ability to expand into new markets and strong growth potential. LGI Homes had 34 active communities in 11 markets across 7 states which was 55% increase year-over-year from inception to 2014. The growth rate of LGI Homes outperforms its peers in all three different market cap level in the following graph.
In the second quarter of 2015, the company’s net income before income taxes increased 52.8% to $21.2 million. Home closings increased 28.9% to 853 homes. Home sales revenues increased 49.3% to $158.8 million. Average home sales price increased 15.8% to $186,197. Based on the strong performance of the first half year, managers raised their guidance. For the full year 2015, managers anticipate closing between 3,000 and 3,300 homes and believe basic EPS will be in the range of $2.15 to $2.50 per share.
Valuation
Company / Ticker / P/S / P/E / P/BLGI Homes / LGIH / 1.17 / 16.45 / 2.66
Beazer Homes / BZH / 0.26 / 10.38 / 1.49
Century Communities / CCS / 0.75 / 16.47 / 1.13
William Lyon Homes / WLH / 0.69 / 18.76 / 1.19
WCI Communities / WCIC / 1.24 / 19.83 / 1.33
Average / 0.82 / 16.38 / 1.56
In the valuation matrices, I choose the peers which have the similar market cap as LGI Homes. The price-to-book and price-to-sales of LGI Homes are higher than the average industry multiples. The price-to-earning of LGI Homes is also slightly higher than the average level. A premium is deserved for the LGI Homes because the company maintains industry leading financial performance in deliveries and gross margin among 20 peers in following graph. 
Conclusion
LGI Homes is a fast growing company. The company’s home closings has 55% growth year-over-year. The net income, sales and margin of the company all had big increase in the first half of the year which raised the guidance of the 2015. Although the company is traded slightly above industry average multiples, LGI Homes’ leading financial performance among peers should gain some premium.