Legacy Stock Story

LEGH
 Stock
  

USD 18.16  0.54  2.89%   

Legacy Housing is currently does not generate positive expected returns and assumes 3.2678% risk (volatility on return distribution) over the 60 days horizon. While some of us are excited about consumer cyclical space, it makes sense to concentrate on Legacy Housing in greater detail to make a better estimate of its risk and reward. What exactly are Legacy Housing shareholders getting in July? Legacy Housing's seemingly stabilizing volatility may still impact the value of the stock as we estimate Legacy Housing as currently undervalued. The real value, based on our calculations, is getting close to 17.96 per share.
Published over two months ago
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Will Legacy Housing (NASDAQ:LEGH) current volatility spike continue?

This firm currently holds 8.28 M in liabilities with Debt to Equity (D/E) ratio of 0.03, which may suggest Legacy Housing is not taking enough advantage from borrowing. The company has a current ratio of 2.1, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Legacy Housing until it has trouble settling it off, either with new capital or with free cash flow. So, Legacy Housing's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Legacy Housing Corp sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Legacy to invest in growth at high rates of return. When we think about Legacy Housing's use of debt, we should always consider it together with cash and equity.
Volatility is a rate at which the price of Legacy Housing or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Legacy Housing may increase or decrease. In other words, similar to Legacy's beta indicator, it measures the risk of Legacy Housing and helps estimate the fluctuations that may happen in a short period of time. So if prices of Legacy Housing fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.

How important is Legacy Housing's Liquidity

Legacy Housing financial leverage refers to using borrowed capital as a funding source to finance Legacy Housing Corp ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Legacy Housing financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Legacy Housing's total debt and its cash.

How does Legacy utilize its cash?

To perform a cash flow analysis of Legacy Housing, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Legacy Housing is receiving and how much cash it distributes out in a given period. The Legacy Housing cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.
Legacy Housing Net Cash Flow from Operations is most likely to increase significantly in the upcoming years. The last year's value of Net Cash Flow from Operations was reported at 60.3 Million

Legacy Housing Volatility Drivers

Legacy Housing unsystematic risk is unique to Legacy Housing Corp and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Legacy Housing you can also buy Beazer Homes USA. You can also mitigate this risk by investing in the residential construction sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Legacy Housing important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Legacy Housing income statement and balance sheet. Here are more details about Legacy volatility.
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