Century Communities Trading Below Tangible Book, Citi Says Buy

Courtesy of Benzinga.

Citi’s Will Randow has started coverage of Century Communities, Inc (NYSE: CCS) with a Buy rating, saying the company’s sub-tangible book valuation doesn’t reflects its solid return on equity and growth potential.

Citi’s bullish thesis is based on the following:

1. “The company’s solid low double digit ROE profile, which more than covers its cost of capital.”
2. “Favorable forward expectations including a ~20 percent 2016–18E EPS CAGR and mid-teens accretion (CAGR) to TBV for that same period.”
3. “Management’s incentive to continue the profitable growth trajectory, given high (i.e. ~27 percent of total) insider ownership.”

Related Link: 5 Legendary Investors Reveal Their Biggest Blunders

Randow set a price target of $23 on the stock, which implies a potential upside of 16.81 percent from the company’s previous close.

At time of writing, shares of Century Communities were up 0.66 percent to $19.82.

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