Back to top

Image: Bigstock

Can Legacy Housing (LEGH) Run Higher on Rising Earnings Estimates?

Read MoreHide Full Article

Legacy Housing (LEGH - Free Report) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving.

The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this mobile home manufacturing company, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For Legacy Housing, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

The earnings estimate of $0.58 per share for the current quarter represents a change of -3.33% from the number reported a year ago.

Over the last 30 days, two estimates have moved higher for Legacy Housing compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 28.89%.

Current-Year Estimate Revisions

For the full year, the company is expected to earn $2.34 per share, representing a year-over-year change of +7.83%.

The revisions trend for the current year also appears quite promising for Legacy Housing, with two estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 36.44%.

Favorable Zacks Rank

Thanks to promising estimate revisions, Legacy Housing currently carries a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

While strong estimate revisions for Legacy Housing have attracted decent investments and pushed the stock 22.7% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Legacy Housing Corporation (LEGH) - free report >>

Published in