Value
7.5/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 8.1 |
| P/S | 7.7 |
| EV/EBITDA | 4.8 |
| Fwd P/E | 8.9 |
| PEG | 6.9 |
- ▸Forward P/E: 12.2x
- ▸PEG: 1.02
- ▸Attractively valued
LEGH · Why this verdict
Why Legacy Housing (LEGH) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.4/10
ConfidenceMEDIUM
MacroNEUTRAL
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. | →Stable |
| 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. | →Stable |
| 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. | →Stable |
| 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. | →Stable |
| 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.
→StableQuality 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.
→StableGrowth 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.
→StableChart 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.
→StableWarnings
- 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.
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.
Per-dimension breakdown
Quality
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.7 |
| ROA | 3.6 |
| Gross margin | 5.6 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 9.4 |
| FCF quality | 1.1 |
| Moat | 5.4 |
| Piotroski F | 7.8 |
- ▸Strong margins: 26%
- ▸Earnings quality RED FLAG: 14% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
3.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.6 |
| EPS growth | 4.4 |
- ▸Declining revenue: -4%
Momentum
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 2.7 |
| OBV | 1.0 |
| MA position | 8.0 |
| Volume | 1.9 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.3 |
| erm sentiment | 6.0 |
Insider
7.5/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
6.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.9 |
| quality rank | 6.6 |
| growth rank | 6.8 |
- ▸Best-in-class margins
- ▸Conservative debt levels
Technical
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.8 |
| support resistance | 4.9 |
| 52w position | 7.3 |
Risk (lower is worse)
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.6 |
| days to cover | 0.0 |
| volatility | 2.7 |
| put call | 0.0 |
| implied vol | 1.0 |
| max pain risk | 3.0 |
| beta | 8.3 |
| debt equity | 10.0 |
- ▸Elevated put/call: 7.14
- ▸High IV: 74%
- ▸Above max pain $18
Catalyst
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:30d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.8<4.5
- ASYMMETRY:-1.7=NEGATIVE
Warning (0)
none
Reward-to-Risk
-1.67
Upside
-13.1%
Downside
7.8%
Sizing output
AVOID
SetupRange Bound — RSI 48 mid-range, Bollinger mid-band
EdgeInst Constrain — Small cap ($0.6B) below institutional reach
SuitabilityAggressive — MCap $0.6B<$5B
Investment implication
The F-path SELL output reflects an overall score of 5.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 7.5) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.8<4.5, ASYMMETRY:-1.7=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.67 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 7.5, Insider at 7.5, and Quality at 6.2; the weakest are Growth at 3.0, Catalyst at 3.7, and Risk (lower is worse) at 3.8. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -1.67 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 Flag
Trip ifThe FCF-to-net-income ratio rises above 60% from the current 14%.
- P3Declining Revenue Weak Growth
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.