LGI Homes (LGIH) AI Stock Analysis

• Market Cap: $984.31M
• Dividend Yield: N/A
• Average Volume (3M): 341.57K
• Price to Earnings (P/E): 13.7
• Beta (1Y): 1.07
• Revenue Growth: -20.62%
• EPS Growth: -45.74%
• Country: US
• Employees: 1,000
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Residential Construction
• EPS (TTM): 0.97
• Shares Outstanding: 23,133,085
• 10 Day Avg. Volume: 335,277
• 30 Day Avg. Volume: 341,573
• PEG Ratio: -0.22
• Price to Book (P/B): 0.48
• Price to Sales (P/S): 0.58
• P/FCF Ratio: -7.07
• Enterprise Value/Market Cap: 2.62
• Enterprise Value/Revenue: 1.51
• Enterprise Value/Gross Profit: 7.30
• Enterprise Value/Ebitda: 26.53
• 1Y Price Target: $66.50
• Price Target Upside: 52.31% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 2
• EPS Forecast (FY): 2.53
• Revenue Forecast (FY): $1.83B

• Rating: 51 Neutral
• Price Target: $44.00 ▲(0.78% Upside)
• Action: Reiterated Date: 02/21/26
• Date: Action: Reiterated 02/21/26

The score is held back primarily by weak financial quality—especially four consecutive years of negative operating/free cash flow and materially compressed margins/returns. The latest earnings call adds support via improved backlog/orders and defined 2026 targets, while technicals and valuation are neutral-to-slightly positive but not strong enough to offset the cash-flow and profitability concerns.

Positive Factors

Backlog and Net Orders Growth

A materially larger backlog and significant net orders growth provide durable revenue visibility across quarters, smoothing production planning and purchase commitments. This backlog supports near‑term closings cadence and reduces reliance on spot demand, improving predictability of cash inflows and operational planning.

Self‑developed Land Margin Advantage

Owning and developing lots lowers per‑home land cost exposure and supports higher gross margins versus pure lot purchasers. This structural land pipeline yields long‑term cost control, competitive pricing flexibility, and margin resilience when spreading development overhead across multiple communities.

Liquidity and Reduced Leverage

Material liquidity and revolver capacity alongside a declining net‑debt ratio provide financial headroom to fund construction, absorb cancellations, and opportunistically monetize lots. This reduces near‑term refinancing risk and gives management time to execute deleveraging and margin recovery plans.

Negative Factors

Multi‑year Negative Cash Flow

Sustained operating and free cash flow deficits force dependence on external financing or asset sales to fund operations and growth. Over a multi‑quarter horizon this erodes financial flexibility, increases refinancing risk, and constrains the company’s ability to invest in land, absorb shocks, or improve returns to shareholders.

Material Margin Compression

Sharp, persistent margin erosion reduces profitability per home and weakens returns on invested capital. Lower margins make it harder to deleverage, fund land development, or absorb incentives without cash strain, and indicate structural pressure on pricing power or rising cost inputs across core markets.

High Cancellation Rate & Incentive Reliance

Very high cancellations and ongoing use of financial incentives indicate persistent affordability and conversion challenges. This undermines booking quality, forces recurring margin dilution, and increases inventory turnover risk, making demand and profitability more sensitive to mortgage rates and buyer credit conditions.

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 the vast majority of its revenue from selling newly constructed single-family homes. Its core revenue stream is home sales revenue recognized at the time homes are closed and delivered to buyers; this sale price generally reflects the base home plus selected options/upgrades and is supported by community-level pricing strategy. To enable these home sales, the company invests in (1) acquiring land and/or finished lots, (2) developing lots and community infrastructure where applicable, and (3) constructing homes; it then earns gross profit as the difference between the home sale price and the combined cost of land, land development, construction, and applicable closing costs. The company’s results are influenced by sales pace (absorptions), average selling price, construction and land costs, and inventory/land position (owned and/or controlled through contracts/option arrangements). In addition to homebuilding revenue, the company can earn smaller amounts of revenue from ancillary activities tied to the homebuying process (for example, fees or other income connected to facilitating services for buyers); if specific ancillary revenue line items are not publicly detailed for the requested context, this data point is null. Significant factors affecting earnings include mortgage interest rates and credit availability (which impact buyer affordability and demand), the company’s ability to source and entitle lots, construction cost inputs (labor and materials), and the effectiveness of its in-house marketing and sales model. Partnerships that can support the revenue model typically include relationships with third-party trade contractors and suppliers for construction, and mortgage/settlement service providers that help buyers complete transactions; specific named partnership terms are null if not publicly specified.

LGI Homes Financial Statement Overview

Summary

Financial performance is pressured by a multi-year cash burn (negative operating and free cash flow for 2022–2025) and a sharp profitability downshift (net margin ~4.3% in 2025 vs ~8.9% in 2024 and ~14% in 2021–2022). Leverage is moderate for the sector and the company remains profitable, but falling returns on equity and persistent negative cash generation are material risks.

Income Statement

Profitability has weakened materially over the last several years: revenue declined in 2024 and again in 2025 (annual), and margins compressed sharply (net margin down to ~4.3% in 2025 vs ~8.9% in 2024 and ~14% in 2021–2022). EBIT margin similarly fell to ~4.7% in 2025 from double-digits in 2023–2024. Strengths include continued profitability (still positive net income) and historically strong margins earlier in the cycle, but the current trajectory points to softer demand/price environment and reduced earnings power.

Balance Sheet

Leverage looks moderate for the sector with debt-to-equity around ~0.75–0.86 across 2022–2025, and equity has grown versus 2020–2021, supporting a larger asset base. However, returns on equity have fallen meaningfully (from ~28–31% in 2020–2021 to ~3.5% in 2025), indicating much lower efficiency in generating profits from shareholders’ capital. Overall, the balance sheet appears workable but less productive, and the elevated debt load requires sustained earnings and/or cash generation to stay comfortable.

Cash Flow

Cash generation is the key weak spot: operating cash flow has been negative for four consecutive years (2022–2025), and free cash flow is also consistently negative over that period, worsening again in 2025. While 2020 showed strong positive operating and free cash flow and 2021 remained slightly positive, the subsequent multi-year outflow profile increases financing/refinancing reliance and reduces flexibility. The scale and persistence of cash burn outweigh the earlier-cycle strength.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.71B	2.20B	2.36B	2.30B	3.05B
Gross Profit	353.55M	533.29M	542.19M	646.60M	818.03M
EBITDA	102.81M	262.02M	235.66M	391.68M	548.85M
Net Income	72.55M	196.07M	199.23M	326.57M	429.64M
Balance Sheet
Total Assets	3.93B	3.76B	3.41B	3.12B	2.35B
Cash, Cash Equivalents and Short-Term Investments	61.25M	53.20M	48.98M	32.00M	50.51M
Total Debt	1.66B	1.52B	1.46B	1.41B	810.57M
Total Liabilities	1.83B	1.72B	1.55B	1.48B	956.02M
Stockholders Equity	2.10B	2.04B	1.86B	1.64B	1.40B
Cash Flow
Free Cash Flow	-140.90M	-145.69M	-58.41M	-371.64M	19.97M
Operating Cash Flow	-139.97M	-143.74M	-56.97M	-370.45M	21.70M
Investing Cash Flow	27.94M	15.62M	-13.65M	-5.97M	-70.39M
Financing Cash Flow	120.08M	132.34M	87.60M	357.90M	63.26M

LGI Homes Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 43.66
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• 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 43.66 is below the 20-day moving average (MA) of 53.30, below the 50-day MA of 51.26, and below the 200-day MA of 52.23, indicating a bearish trend. The MACD of -2.07 indicates Positive momentum. The RSI at 28.65 is Positive, neither overbought nor oversold. The STOCH value of 9.79 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	69 Neutral	$3.92B	11.14	7.29%	―	-16.60%	-29.85%
HOV	63 Neutral	$659.54M	8.76	6.81%	―	-0.84%	-76.30%
CCS	63 Neutral	$1.74B	12.06	8.37%	1.99%	-6.28%	-31.55%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
LGIH	51 Neutral	$984.31M	13.73	3.51%	―	-20.62%	-45.74%
UHG	51 Neutral	$68.22M	-1.93	-26.00%	―	-6.20%	24.90%
BZH	49 Neutral	$641.48M	-4.50	0.81%	―	1.77%	-66.27%

LGI Homes Corporate Events

LGI Homes Posts 2025 Results, Issues Cautious 2026 Outlook

LGI Homes reported fourth-quarter and full-year 2025 results on February 17, 2026, posting Q4 home sales revenue of $474.0 million on 1,301 home closings with an average sales price of $364,310 and an adjusted gross margin of 22.3%. For 2025, the company generated $1.7 billion in home sales revenue, 4,685 home closings at an average price of $364,035, net income of $72.6 million, and ended the year with 144 active communities, a 1,394-home backlog valued at $501.3 million and total liquidity of $334.8 million.

Management highlighted the margin support from its self-developed land pipeline and disciplined inventory management, noting that a wholesale agreement to deliver 480 homes in 2026 helped drive a 133% increase in year-end backlog, underscoring robust future demand. The 2026 outlook, which calls for 4,600 to 5,400 home closings, modestly expanding community count and adjusted gross margins between 21.0% and 23.0%, signals a cautious but growth-oriented stance that could reinforce LGI Homes’ positioning in the affordable housing segment and provide greater earnings visibility for investors and other stakeholders, assuming current market conditions persist.

The most recent analyst rating on (LGIH) stock is a Hold with a $53.00 price target. To see the full list of analyst forecasts on LGI Homes stock, see the LGIH Stock Forecast page.