LGI Homes (LGIH) AI Stock Analysis

• Market Cap: $1.36B
• Dividend Yield: N/A
• Average Volume (3M): 370.66K
• Price to Earnings (P/E): 7.5
• Beta (1Y): 1.30
• Revenue Growth: -4.37%
• EPS Growth: -3.17%
• Country: US
• Employees: 1,000
• Sector: Consumer Cyclical
• Sector Strength: 64
• Industry: Residential Construction
• EPS (TTM): 0.17
• Shares Outstanding: 23,404,503
• 10 Day Avg. Volume: 357,827
• 30 Day Avg. Volume: 370,658
• PEG Ratio: -0.99
• Price to Book (P/B): 0.59
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -6.91
• Enterprise Value/Market Cap: 2.02
• Enterprise Value/Revenue: 0.28
• Enterprise Value/Gross Profit: 5.35
• Enterprise Value/Ebitda: 3.14
• 1Y Price Target: $84.00
• Price Target Upside: 45.88% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

• Rating: 63 Neutral
• Price Target: $63.00 ▲(9.41%Upside)

LGI Homes demonstrates a stable financial footing with potential valuation upside, yet faces significant challenges in revenue growth and cash flow. The technical indicators provide some positive momentum, while the earnings call reflects both strategic growth and operational headwinds.

Positive Factors

Expansion Opportunities

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

Valuation

Valuation looks attractive as LGIH is currently trading at 0.9x the analyst's FTM book value, well below its five-year average.

Negative Factors

Earnings Performance

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.

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 our estimate of 6,713.

Sales 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 makes money primarily through the sale of newly constructed homes. The company's revenue model is centered around the development and sale of single-family homes in master-planned communities. LGI Homes purchases land, develops it into residential communities, and sells completed homes to individual buyers. The company benefits from economies of scale by standardizing its home designs and construction processes, which helps to maintain affordability for its target market. Additionally, LGI Homes often seeks to acquire land in regions with high growth potential and favorable economic conditions to maximize its profitability. Partnerships with local contractors and suppliers also contribute to cost efficiency, further supporting the company's revenue generation.

LGI Homes Financial Statement Overview

Summary

LGI Homes shows a stable financial position with reasonable profitability margins and balanced leverage. However, it faces challenges with declining revenues and negative cash flow growth, which impact its financial performance negatively. To improve, the company needs to enhance revenue streams and manage cash flows more effectively.

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	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
EBITDA	212.15M	235.66M	391.68M	548.85M	370.29M
Net Income	196.07M	199.23M	326.57M	429.64M	323.89M
Balance Sheet
Total Assets	3.76B	3.41B	3.12B	2.35B	1.83B
Cash, Cash Equivalents and Short-Term Investments	53.20M	48.98M	32.00M	50.51M	35.94M
Total Debt	1.48B	1.36B	1.26B	805.24M	538.40M
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

• Technical Analysis Sentiment: Positive
• Last Price: 57.58
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LGIH, the sentiment is Positive. The current price of 57.58 is above the 20-day moving average (MA) of 54.31, above the 50-day MA of 52.67, and below the 200-day MA of 77.41, indicating a neutral trend. The MACD of 1.30 indicates Negative momentum. The RSI at 57.79 is Neutral, neither overbought nor oversold. The STOCH value of 78.17 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LGIH.

LGI Homes Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TPH	81 Outperform	$2.88B	8.05	11.38%	―	-3.59%	-10.82%
HOV	79 Outperform	$665.61M	4.25	28.55%	―	7.93%	-3.59%
DFH	75 Outperform	$2.55B	8.57	26.25%	―	21.18%	11.40%
BZH	71 Outperform	$735.46M	7.84	7.97%	―	13.50%	-40.36%
CCS	70 Outperform	$1.84B	7.82	10.34%	1.84%	3.76%	-17.55%
LGIH	63 Neutral	$1.36B	7.51	9.36%	―	-4.37%	-3.17%
Sector *	63 Neutral	$17.10B	10.62	-8.48%	2.94%	1.62%	-25.72%

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.