Legacy Housing Corp (LEGH) stock intrinsic value fair value estimate & owner earnings analysis

Legacy Housing builds manufactured homes and tiny homes in Texas and Indiana, sells them mainly through independent dealers and to manufactured-home community owners, and earns a second stream of interest income by financing many of those buyers itself (consumer loans, community-owner notes and dealer floor-plan loans). It is a first-time analysis. How we measured earnings. Reported profit and cash flow diverge sharply here because the company keeps lending to its customers: in 2023 it reported $54M of net income but operating cash flow was negative $13.5M, with about $59M going into new loans. We treated the growth or shrinkage of that loan book, like receivables and inventory, as a timing item rather than a cost, then deducted stock compensation and the portion of capital spending needed just to stay in business (in 2024 and 2025 revenue fell, so all capex was treated as maintenance). This gives owner earnings per share of about $0.94 (2018), $1.09, $1.55, $2.01, $2.66 (2022 peak), $1.89, $1.77 and $1.50 (2025). We anchor on the 2023-2025 median of about $1.77, because the 2021-2022 pandemic housing boom has reversed and should not set the level. Revenue fell from $257M in 2022 to $165M in 2025; owner earnings fell about 16% in 2025. The base case therefore starts flat at $1.77, not below 2025 actuals with a growth assumption: the step up from $1.50 is a return toward the normal level, supported by first-half 2026 revenue of $100.7M versus $85.8M a year earlier and net income of $34.4M versus $25.0M (June 2026 quarterly report), not by assumed growth. Base case (about $19 per share): $1.77 a year with no growth credited, lasting about 15 years and then fading to zero over ten more. Demand for affordable factory-built housing, the company's Texas plants and its dealer and community-owner relationships have produced positive owner earnings every year since 2018. We credit no growth: unit volumes, share gains, new tiny-home products and the 2024 AmeriCasa acquisition are not yet proven earnings drivers. Bear case (about $9.50): owner earnings settle near $1.20 (close to 2019 and 2020 levels) because volumes keep sliding as they did in 2023 to 2025, and credit losses on the loan book rise; the provision for receivable losses was already $5.4M in 2025. Earnings run for about eight years, then fade to zero over eight more. Bull case (about $28): owner earnings return to about $2.30, the level demonstrated in 2021 to 2023, with the recent first-half 2026 recovery holding; lasting about 20 years with a ten-year fade. What could make this wrong. The largest judgement is treating loan-book growth as timing: if the notes receivable are worth less than carried, or if the company must keep lending heavily to sell homes (loan outflows reached $79M in 2022), true owner earnings are lower, as the $(0.55) to $1.09 range we would see if loan growth were counted as a cost shows. The net value of that loan book could not be fully verified from the filings in this review. Company borrowing is small (cash interest paid was $2K in 2025), so leverage is not a major factor. Housing-cycle and interest-rate sensitivity is high.