LGI Homes (LGIH) AI Stock Analysis

• Market Cap: $1.21B
• Dividend Yield: N/A
• Average Volume (3M): 318.32K
• Price to Earnings (P/E): 6.6
• Beta (1Y): 1.37
• Revenue Growth: -4.37%
• EPS Growth: -3.17%
• Country: US
• Employees: 1,000
• Sector: Consumer Cyclical
• Sector Strength: 74
• Industry: Residential Construction
• EPS (TTM): 0.17
• Shares Outstanding: 23,404,503
• 10 Day Avg. Volume: 320,994
• 30 Day Avg. Volume: 318,324
• PEG Ratio: -1.07
• Price to Book (P/B): 0.63
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -7.48
• Enterprise Value/Market Cap: 2.37
• Enterprise Value/Revenue: 0.29
• Enterprise Value/Gross Profit: 5.55
• Enterprise Value/Ebitda: 3.26
• 1Y Price Target: $97.33
• Price Target Upside: 88.99% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 4

• Rating: 58 Neutral
• Price Target: ―

LGI Homes exhibits a stable financial position with potential undervaluation, but faces significant challenges in revenue growth and cash flow generation. Technical indicators suggest bearish momentum, moderated by strategic initiatives and a strong backlog, resulting in a cautious outlook.

Positive Factors

Community Expansion

Community count continues to ramp with LGIH ending December 2024 with 151 active selling communities, up 29% year over year.

Valuation

Valuation attractive. LGIH is currently trading at 0.81x of the 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 the $2.30 estimate, driven by lower gross margin, higher SG&A/sales, and lower ASP than expected.

Guidance

Initial 2025 guidance below expectations. LGIH has guided to 6,200 to 7,000 home deliveries in 2025, with the midpoint of 6,600 below the consensus expectation of 7,439 and estimate of 6,713.

Order Growth

Order growth of only 8% was significantly below the 35% expectation.

LGI Homes Business Overview & Revenue Model

Company Description

LGI Homes, Inc. designs, constructs, and sells homes. It offers entry-level homes, such as attached and detached homes, and active adult homes under the LGI Homes brand name; and luxury series homes under the Terrata Homes brand name. The company also engages in the wholesale business, which include building and selling homes to companies looking to acquire single-family rental properties. As of December 31, 2021, it owned 101 communities. The company serves customers in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada, West Virginia, Virginia, and Pennsylvania. LGI Homes, Inc. was founded in 2003 and is headquartered in The Woodlands, Texas.

How the Company Makes Money

LGI 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 shows stable financial performance with reasonable profitability ratios and balanced leverage. However, it faces challenges with revenue declines and negative cash flow, indicating the need for improved cash management and sales momentum.

Income Statement

LGI Homes shows a mixed performance with declining revenues and profitability. The Gross Profit Margin stands at 24.39% TTM, which is reasonable, but the Net Profit Margin of 10.10% TTM has decreased. Revenue growth has been negative, indicating challenges in maintaining sales momentum. However, the company maintains a stable EBIT Margin at 10.69% TTM and an EBITDA Margin at 11.10% TTM, reflecting operational efficiency despite revenue declines.

Balance Sheet

The company's balance sheet reflects moderate financial leverage with a Debt-to-Equity Ratio of 0.80 TTM, indicating a balanced capital structure. Return on Equity is 8.96% TTM, which is adequate but shows room for improvement. The Equity Ratio of 52.53% TTM suggests a healthy level of equity financing, providing a buffer against liabilities. Overall, the balance sheet is stable, though improvements in equity returns could enhance performance.

Cash Flow

Cash flow analysis reveals challenges with negative Free Cash Flow growth and a negative Operating Cash Flow to Net Income Ratio of -0.94 TTM, indicating cash generation issues. The Free Cash Flow to Net Income Ratio is also negative, reflecting cash flow struggles despite profitability. These factors highlight the need for better cash management to support operations and growth.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
2.16B	2.20B	2.36B	2.30B	3.05B	2.37B
	Gross Profit
515.60M	533.29M	542.19M	646.60M	818.03M	603.10M
	EBIT
193.58M	212.15M	233.25M	390.11M	547.70M	364.71M
	EBITDA
201.09M	212.15M	235.66M	391.68M	548.85M	370.29M
	Net Income Common Stockholders
183.01M	196.07M	199.23M	326.57M	429.64M	323.89M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
49.00M	53.20M	48.98M	32.00M	50.51M	35.94M
	Total Assets
3.52B	3.76B	3.41B	3.12B	2.35B	1.83B
	Total Debt
1.39B	1.48B	1.36B	1.26B	805.24M	538.40M
	Net Debt
1.34B	1.43B	1.31B	1.23B	754.72M	502.46M
	Total Liabilities
1.65B	1.72B	1.55B	1.48B	956.02M	687.08M
	Stockholders Equity
1.87B	2.04B	1.86B	1.64B	1.40B	1.14B
Cash Flow		Free Cash Flow
-173.18M	-145.69M	-58.41M	-371.64M	19.97M	199.47M
	Operating Cash Flow
-171.39M	-143.74M	-56.97M	-370.45M	21.70M	202.16M
	Investing Cash Flow
13.36M	15.62M	-13.65M	-5.97M	-70.39M	-5.65M
	Financing Cash Flow
166.64M	132.34M	87.60M	357.90M	63.26M	-198.91M

LGI Homes Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 51.50
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 51.5 is below the 20-day moving average (MA) of 55.52, below the 50-day MA of 60.60, and below the 200-day MA of 89.41, indicating a bearish trend. The MACD of -1.94 indicates Positive momentum. The RSI at 35.72 is Neutral, neither overbought nor oversold. The STOCH value of 9.02 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LGIH.

LGI Homes Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TPH	77 Outperform	$2.71B	6.65	13.28%	―	10.82%	19.34%
DFH	70 Outperform	$1.96B	6.55	26.25%	―	21.18%	11.40%
HOV	69 Neutral	$603.59M	3.22	28.57%	―	7.92%	-3.52%
BZH	66 Neutral	$628.19M	6.70	7.97%	―	13.50%	-40.36%
CCS	65 Neutral	$1.62B	5.48	12.36%	2.02%	10.75%	8.31%
Sector *	62 Neutral	$6.84B	11.22	2.83%	3.95%	2.65%	-21.93%
LGIH	58 Neutral	$1.21B	6.64	9.36%	―	-4.37%	-3.17%

LGI Homes Corporate Events

LGI Homes Elects Directors and Amends Stock Plan

At the Annual Meeting on April 24, 2025, LGI Homes elected directors for one-year terms, ratified Ernst & Young LLP as their accounting firm for 2025, approved executive compensation for 2024, and amended their 2016 Employee Stock Purchase Plan. These decisions reflect the company’s ongoing governance and operational strategies, impacting its financial oversight and employee benefits structure.

LGI Homes Reports Strong Q1 2025 Financial Results

LGI Homes reported its first quarter 2025 financial results, highlighting strong demand for new homes despite challenges such as affordability and rate volatility. The company delivered 996 homes with a total revenue of $351.4 million, and adjusted its gross margin guidance due to tariff-related cost increases. LGI Homes remains confident in its full-year guidance, emphasizing the long-term demand for entry-level homes amid a persistent shortage.

LGI Homes Reports Strong 2024 Financial Results

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.