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

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

Insider & Institutional Ownership

84.9% of LGI Homes shares are owned by institutional investors. Comparatively, 89.3% of Legacy Housing shares are owned by institutional investors. 12.6% of LGI Homes shares are owned by company insiders. Comparatively, 30.1% of Legacy Housing shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

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

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

Risk & Volatility

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

Analyst Recommendations

This is a summary of current recommendations and price targets for LGI Homes and Legacy Housing, as reported by MarketBeat.

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

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

Earnings and Valuation

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

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

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.

Summary

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

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.

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.