Institutions Are Buying LCI Industries
With shares down at a 1-year low and the entire RV industry outperforming expectations, we are not surprised to see insiders buying LCI Industries (NYSE: LCII). LCI Industries makes and markets a wide range of parts and components for OEMs and aftermarket RV owners and so is in high demand. The RV industry doubled not once but twice during the pandemic and backlogs are only now beginning to come down. The outlook for the industry is that backlogs and rebuilding dealer inventory will not be completed until the end of this year if this year at all and that means business for LCI Industries.
Not one but four of LCI Industries' top insiders bought stock in March 2022. This includes two directors, the CEO, and a major shareholder who had been selling in 2021. Their purchases amount to only 0.1% of the market cap but are a telling sign of confidence nonetheless. While a small drop in the company bucket, the $2.97 million in purchases is quite a bit of skin for these insiders to have in the game and institutional ownership is high as well. The institutions have been net buyers for 4 of the last 5 quarters and their activity was robust in Q1 2022. Institutional activity totaled $0.267 billion in Q1 with the net of activity bullish and worth about 5.15% of the market cap. The institutions now hold 97.6% of the shares making LCI Industries a very tightly held issue.
The Analysts Set A High Bar For LCI Industries
The analysts are expecting big things from LCI Industries too and set a very high bar for the company to beat. The Insidertrades.com consensus is for revenue of $1.38 billion which is up 14% sequentially, 38% from last year, and more than double in the two-year stack. In our view, this bar may in fact be easy to beat but there are supply chain headwinds to consider as well. As for the analysts' sentiment, the consensus of 3 analysts is a firm Buy with a price target nearly 60% above the recent price action. The caveat is that only one analyst has come out with commentary this year but that will likely change after the company reports earnings in the first week of May.
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And LCI Industries is growing via acquisition as well. The company just signed a deal for its Lippert segment to acquire most of Girard Systems and Girard Products which manufactures awning systems and tankless water heaters for OEMs and after-market consumers in the RV and related vehicle industries. "The addition of Girard will allow us to provide a wider range of exceptional products to our customers, especially in the higher-end motorized segment of the RV industry," said Ryan Smith, group president, Lippert - North America.
LCI Industries Pays A Healthy Dividend
LCI Industries pays a healthy 3.35% yield and it doesn’t cost an arm and a leg. Trading at only 7X its earnings the company is cheaply valued along with its peers and offers an opportunity for dividend growth as well. The company has been increasing the dividend for the last 5 years at a 13% pace and is only paying out 30% of the earnings. The balance sheet has some red flags but debt is being used to fuel growth and growth is delivering results so we’re ok with it for now.
The Technical Outlook: A Bottom In LCI Industries
LCI Industries stock corrected more than 30% from its high but may now be forming a bottom. The correction was driven by short-selling more than anything else and has the stock trading at a key support with promising results just around the corner. The indicators suggest the stock is overextended at this level as well, and set up for a rebound given the right catalyst. Assuming the market can hold above the $100 level and the earnings news is good, we see a rebound taking price action up into the $130 to $150 range. If not, this stock may continue to move sideways at current levels or fall to new lows. A move below $100 accompanied by bad or weaker-than-expected results/outlook could take the market down to $80 or lower.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| LCI Industries (LCII) | $106.56 | +2.3% | 3.94% | 42.12 | Reduce | $104.20 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
