Value
7.4/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 8.3 |
| P/S | 7.7 |
| EV/EBITDA | 5.5 |
| Fwd P/E | 8.8 |
| PEG | 6.4 |
- ▸Forward P/E: 12.7x
- ▸PEG: 1.15
- ▸Attractively valued
LEGH · Why this verdict
Why Legacy Housing (LEGH) is rated HOLD
Updated
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VerdictHOLD
Overall score7.0/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Legacy Housing screens as attractively valued with strong margins and a breakout technical setup, but revenue is declining, an earnings-quality red flag shows weak cash conversion, and the stock has already reached its price target with an unfavorable stated risk/reward.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Despite strong margins near 26% and a solid Piotroski F-score of 7 out of 9, the data flags a red-flag-level earnings-quality concern, with free cash flow at only about 14% of net income. Quality breakdown | The FCF-to-net-income ratio recovering well above its current level would resolve the earnings-quality red flag. | Tripped↑Improving |
| CounterA cash-conversion gap this wide can signal that reported earnings are not being backed by real cash generation, undermining the strength implied by the margin and Piotroski figures. | ||
Shares screen as attractively valued, trading at roughly 12.4x forward earnings with a PEG ratio near 1.03. Valuation breakdown | The valuation should stay reasonable or the multiple should expand modestly if earnings stabilize at or above current levels. | →Stable |
| CounterThe stock has already reached its stated price target with only about 1% upside remaining, suggesting much of the value case may already be priced in. | ||
Revenue is declining, down about 4%, consistent with the data's weak-growth characterization. Growth breakdown | Revenue growth returning to positive territory would reverse the current declining-revenue signal. | Tripped↑Improving |
| CounterMargins remain strong even with revenue contracting, suggesting the company can sustain profitability through a period of top-line softness. | ||
The stock is in a breakout setup, having formed a golden cross and trading above all major moving averages with RSI at 62 and MACD reading bullish. Chart pattern detection | The stock holding above its moving averages with MACD remaining bullish would confirm the breakout setup is continuing to play out. | ↑Improving |
| CounterThe 200-day moving-average slope is flat rather than rising, which the data notes directly, suggesting the underlying trend strength backing the breakout may be limited. | ||
The stock has reached its stated price target with only about 1% upside remaining, and the engine's own asymmetry check fails at roughly -1.3, indicating downside risk that outweighs the remaining reward. Warnings | A new, higher price target or a pullback restoring meaningfully positive upside would be needed for the asymmetry to turn favorable again. | ↑Improving |
| CounterMomentum remains constructive with a breakout setup in place, which could support shares grinding to new highs and the target being revised upward. | ||
Despite strong margins near 26% and a solid Piotroski F-score of 7 out of 9, the data flags a red-flag-level earnings-quality concern, with free cash flow at only about 14% of net income.
Tripped↑ImprovingQuality breakdown
- Expectation
- The FCF-to-net-income ratio recovering well above its current level would resolve the earnings-quality red flag.
CounterA cash-conversion gap this wide can signal that reported earnings are not being backed by real cash generation, undermining the strength implied by the margin and Piotroski figures.
Shares screen as attractively valued, trading at roughly 12.4x forward earnings with a PEG ratio near 1.03.
→StableValuation breakdown
- Expectation
- The valuation should stay reasonable or the multiple should expand modestly if earnings stabilize at or above current levels.
CounterThe stock has already reached its stated price target with only about 1% upside remaining, suggesting much of the value case may already be priced in.
Revenue is declining, down about 4%, consistent with the data's weak-growth characterization.
Tripped↑ImprovingGrowth breakdown
- Expectation
- Revenue growth returning to positive territory would reverse the current declining-revenue signal.
CounterMargins remain strong even with revenue contracting, suggesting the company can sustain profitability through a period of top-line softness.
The stock is in a breakout setup, having formed a golden cross and trading above all major moving averages with RSI at 62 and MACD reading bullish.
↑ImprovingChart pattern detection
- Expectation
- The stock holding above its moving averages with MACD remaining bullish would confirm the breakout setup is continuing to play out.
CounterThe 200-day moving-average slope is flat rather than rising, which the data notes directly, suggesting the underlying trend strength backing the breakout may be limited.
The stock has reached its stated price target with only about 1% upside remaining, and the engine's own asymmetry check fails at roughly -1.3, indicating downside risk that outweighs the remaining reward.
↑ImprovingWarnings
- Expectation
- A new, higher price target or a pullback restoring meaningfully positive upside would be needed for the asymmetry to turn favorable again.
CounterMomentum remains constructive with a breakout setup in place, which could support shares grinding to new highs and the target being revised upward.
Per-dimension breakdown
Quality
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.2 |
| ROA | 4.2 |
| Gross margin | 5.8 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 9.4 |
| FCF quality | 2.6 |
| Moat | 7.1 |
| Piotroski F | 8.9 |
- ▸Strong margins: 29%
- ▸Earnings quality RED FLAG: 32% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 32% YoY
Momentum
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.3 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 2.5 |
- ▸Overbought (RSI 74)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.0 |
| Analyst rating | 5.0 |
| Price target | 2.6 |
- ▸LLM news sentiment: +0.40 (n=1)
- ▸Below analyst target
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
7.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.9 |
| quality rank | 6.9 |
| growth rank | 9.4 |
- ▸Best-in-class margins
- ▸Industry growth leader
Technical
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.4 |
| support resistance | 3.9 |
| 52w position | 8.5 |
Risk (lower is worse)
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.7 |
| days to cover | 1.1 |
| volatility | 1.7 |
| put call | 10.0 |
| implied vol | 0.0 |
| beta | 8.4 |
| debt equity | 10.0 |
- ▸High IV: 96%
Catalyst
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| news activity | 5.0 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (6)
- MOMENTUM:7.2>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:87d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-2.3=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-2.32
Upside
-29.5%
Downside
12.7%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeInst Constrain — Small cap ($0.7B) below institutional reach
SuitabilityAggressive — MCap $0.7B<$5B
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:7.2>=5.5. Top dim: Growth at 10.0; weakest: Catalyst at 3.7. No conviction either direction.
The strongest dimensions are Growth at 10.0, Value at 7.4, and Insider at 7.3; the weakest are Catalyst at 3.7, Technical at 4.3, and Sentiment at 4.9. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -2.32 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Attractive Valuation
Trip ifForward P/E rises above 18x from the current 12.4x.
- P2Earnings Quality Cash Conversion FlagTripped
Trip ifThe FCF-to-net-income ratio rises above 60% from the current 14%.
- P3Declining Revenue Weak GrowthTripped
Trip ifRevenue growth turns positive (exceeds 0%) from the current -4%.
- P4Breakout Technical Setup
Trip ifThe stock falls below its 200-day moving average, reversing the current above-trend breakout position.
- P5Negative Asymmetry Target Reached
Trip ifThe risk/reward asymmetry ratio rises above 0 (turns positive) from the current -1.27.