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LGI Homes (LGIH)
NASDAQ:LGIH
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LGI Homes
(NASDAQ:LGIH)
45Neutral
Positive Factors
Valuation
LGIH is currently trading at 0.81x of our FTM book value, well below its five-year average of 2.4x, and functionally at historical trough levels.
Negative Factors
Earnings
LGIH reported 4Q EPS of $2.15, below our $2.30 estimate, driven by lower gross margin, higher SG&A/sales, and lower ASP than expected.
Sales Growth
Order growth of only 8% was significantly below the 35% expectation.
LGI Homes (LGIH) vs. S&P 500 (SPY)
Market Cap
$1.76B
Dividend YieldN/A
Average Volume (3M)297.33K
Price to Earnings (P/E)8.7
Beta (1Y)2.03
Revenue Growth-6.61%
EPS Growth-1.56%
CountryUS
Employees1,089
SectorConsumer Cyclical
Sector Strength49
IndustryResidential Construction
Share Statistics
EPS (TTM)8.31
Shares Outstanding23,397,074
10 Day Avg. Volume400,130
30 Day Avg. Volume297,328
Financial Highlights & Ratios
PEG Ratio1.09
Price to Book (P/B)N/A
Price to Sales (P/S)0.80
Price to Cash Flow (P/CF)7.70
P/FCF Ratio7.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$106.67Price Target Upside51.05% Upside
Rating ConsensusHold
Number of Analyst Covering5
LGI Homes Business Overview & Revenue Model
Company DescriptionLGI Homes, Inc. engages in the design, construction, marketing, and sale of new homes. It also deals with the residential land development business. It operates through the following segments: Central, West, Southeast, Florida, and Northwest. The company was founded by Eric Thomas Lipar in 2003 and is headquartered in The Woodlands, TX.
How the Company Makes MoneyLGI Homes generates revenue primarily through the construction and sale of single-family homes. The company's revenue model is centered around acquiring land, developing residential communities, and selling completed homes to customers. LGI Homes typically purchases land in desirable locations, often in suburban areas with access to major metropolitan centers, and then develops these plots into fully built communities. The company sells homes directly to consumers, with a focus on affordability and quality, appealing mainly to first-time homebuyers. Additional revenue streams may include mortgage origination services, where LGI Homes assists buyers in securing financing for their home purchases. The company's earnings are influenced by factors such as housing market conditions, interest rates, availability of credit, and demographic trends that drive demand for entry-level housing.
LGI Homes Financial Statement Overview
Summary
LGI Homes is facing financial challenges with declining revenue, decreased net income, and negative cash flow, indicating potential liquidity issues. Although the balance sheet shows some equity stability, the overall financial health needs improvement.Income Statement
LGI Homes shows a declining revenue trend with a significant drop in total revenue in 2024, indicating potential market or operational challenges. The gross profit margin was not calculable for 2024 due to zero revenue. Net income has decreased from previous years, impacting net profit margins. EBIT and EBITDA margins have also seen a decline, suggesting reduced operational efficiency.45
Neutral
Balance Sheet
The company has a moderately high debt-to-equity ratio, indicating reliance on debt financing. However, stockholders' equity has grown over time, which is a positive sign. The equity ratio is satisfactory, showing a relatively stable asset structure compared to liabilities, despite increasing total debt.60
Neutral
Cash Flow
LGI Homes faces challenges in cash flow management, with negative operating and free cash flows in 2024. Free cash flow growth has been negative, highlighting potential liquidity issues. The operating cash flow to net income ratio is negative, pointing to inefficiencies in converting income to cash.30
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.20B | 2.36B | 2.30B | 3.05B | 2.37B | Gross Profit |
| 533.29M | 542.19M | 646.60M | 818.03M | 603.10M | EBIT |
| 212.15M | 233.25M | 390.11M | 547.70M | 364.71M | EBITDA |
| 212.15M | 235.66M | 391.68M | 548.85M | 370.29M | Net Income Common Stockholders |
| 196.07M | 199.23M | 326.57M | 429.64M | 323.89M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 53.20M | 48.98M | 32.00M | 50.51M | 35.94M | Total Assets |
| 3.76B | 3.41B | 3.12B | 2.35B | 1.83B | Total Debt |
| 1.48B | 1.36B | 1.26B | 805.24M | 538.40M | Net Debt |
| 1.43B | 1.31B | 1.23B | 754.72M | 502.46M | Total Liabilities |
| 1.72B | 1.55B | 1.48B | 956.02M | 687.08M | Stockholders Equity |
| 2.04B | 1.86B | 1.64B | 1.40B | 1.14B |
| Cash Flow | Free Cash Flow | |||
| -145.69M | -58.41M | -371.64M | 19.97M | 199.47M | Operating Cash Flow |
| -143.74M | -56.97M | -370.45M | 21.70M | 202.16M | Investing Cash Flow |
| 15.62M | -13.65M | -5.97M | -70.39M | -5.65M | Financing Cash Flow |
| 132.34M | 87.60M | 357.90M | 63.26M | -198.91M |
LGI Homes Technical Analysis
Negative
70.62
Price Trends
83.54
Negative
93.60
Negative
98.52
Negative
Market Momentum
-3.61
Negative
32.57
Neutral
44.92
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LGIH, the sentiment is Negative. The current price of 70.62 is below the 20-day moving average (MA) of 76.36, below the 50-day MA of 83.54, and below the 200-day MA of 98.52, indicating a bearish trend. The MACD of -3.61 indicates Negative momentum. The RSI at 32.57 is Neutral, neither overbought nor oversold. The STOCH value of 44.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LGIH.
LGI Homes Risk Analysis
LGI Homes disclosed 53 risk factors in its most recent earnings report. LGI Homes reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
LGI Homes Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $41.76B | 9.36 | 19.35% | 1.09% | 2.12% | 1.63% | |
75 Outperform | $4.48B | 7.41 | 16.52% | 1.60% | 8.10% | 20.03% | |
74 Outperform | $21.43B | 7.20 | 27.40% | 0.79% | 11.74% | 25.66% | |
69 Neutral | $10.62B | 7.35 | 20.38% | 0.86% | 5.86% | 12.20% | |
67 Neutral | $31.94B | 8.48 | 14.30% | 1.68% | 3.47% | 4.22% | |
59 Neutral | $12.50B | 10.40 | 2.26% | 3.63% | 1.65% | -18.81% | |
45 Neutral | $1.76B | 8.66 | 10.07% | ― | -6.61% | -1.56% |
* Consumer Cyclical Sector Average
Performance Comparison
LGIH
LGI Homes
70.62
-37.70
-34.80%
DHI
DR Horton
125.29
-23.67
-15.89%
KBH
KB Home
59.89
-6.09
-9.23%
LEN
Lennar
116.33
-28.62
-19.74%
PHM
PulteGroup
101.09
-8.08
-7.40%
TOL
Toll Brothers
103.02
-14.33
-12.21%
LGI Homes Earnings Call Summary
Earnings Call Date: Feb 25, 2025 | % Change Since: -7.07% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a balanced view with significant achievements such as record community count growth and improved margins, offset by challenges such as decreased revenue and the impact of rising mortgage rates. LGI Homes, Inc. exhibited strong strategic investment and market performance but faces affordability challenges and increased expenses.Highlights
Record Community Count Growth
LGI Homes, Inc. opened 80 new communities in 2024, bringing the total to a record-breaking 151 active communities, representing a year-over-year increase of 29%.
Improved Gross and Adjusted Margins
Full-year gross margin increased by 120 basis points to 24.2%, and adjusted gross margin increased by 160 basis points to 26.3% compared to the prior year.
Increased Average Sales Price
The full-year average sales price increased by 4.2% to $365,394.
Successful Strategic Investments
Continued strategic investments in land, inventory, and operating platforms to support growth and affordability.
Strong Performance in Key Markets
Top markets such as Charlotte, Las Vegas, Washington DC, Raleigh, and Fort Pierce showed strong closings per community per month, contributing to the overall success.
Healthy Backlog Management
The company ended the year with 599 homes in backlog, valued at $236.5 million, despite a softer demand environment.
Lowlights
Decrease in Revenue and Closings
Fourth-quarter revenue decreased by 8.4% year over year due to a 12.8% decrease in closings.
Impact of Rising Mortgage Rates
Higher mortgage rates exceeding 7% in January 2025 affected orders and closings, leading to a subdued trend compared to the previous year.
Increased Selling, General, and Administrative Expenses
SG&A expenses increased by 150 basis points to 14.6% of revenue, driven by higher advertising spending and personnel costs.
Lower Absorption Rate Guidance
For 2025, LGI Homes, Inc. expects a lower absorption rate of around 3.5 homes per community per month, reflecting a conservative outlook on market conditions.
Slower Start to First Quarter 2025
The first quarter of 2025 got off to a slower start with both orders and closings down compared to the previous year, influenced by increased mortgage rates.
Company Guidance
During the LGI Homes, Inc. fourth-quarter 2024 conference call, management provided guidance for 2025, projecting full-year closings between 6,200 and 7,000 homes, with an expected average sales price ranging from $360,000 to $370,000. The company aims to end 2025 with 160 to 170 active selling communities, indicating a community count growth of approximately 9% at the midpoint. Despite anticipated cost inflation, LGI Homes expects to maintain gross margins between 23.2% and 24.2% and adjusted gross margins between 25.5% and 26.5%. Selling, general, and administrative expenses are projected to range from 14% to 15% of revenue, with a full-year tax rate of about 24.5%. The company plans to continue offering incentives, valued at around $20,000 per home, to address affordability challenges while maintaining strong operational discipline and supporting sustainable growth.LGI Homes Corporate Events
Business Operations and StrategyFinancial Disclosures
LGI Homes Reports Strong 2024 Financial Results
Positive
Feb 25, 2025
LGI Homes reported its financial results for the fourth quarter and full year 2024, highlighting a strong finish despite a mixed macroeconomic environment. The company achieved full-year closings of 6,131 homes and increased its active communities by 29.1% to a record 151. While home sales revenues decreased by 6.6% to $2.2 billion, the average sales price per home rose by 4.2% to $365,394. Looking ahead to 2025, LGI Homes projects home closings between 6,200 and 7,000, with a focus on maintaining profitability through strategic investments and operational discipline.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.