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LGI Homes (LGIH)
NASDAQ:LGIH

LGI Homes (LGIH) AI Stock Analysis

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LGI Homes

(NASDAQ:LGIH)

Rating:63Neutral
Price Target:
$55.00
▲(1.05%Upside)
LGI Homes' overall stock score is primarily influenced by its stable financial position and undervalued status, despite negative revenue growth and cash flow challenges. The neutral technical indicators and mixed sentiment from the earnings call also impact the score, indicating moderate potential for improvement.
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 (LGIH) vs. SPDR S&P 500 ETF (SPY)

LGI Homes Business Overview & Revenue Model

Company DescriptionLGI 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 MoneyLGI 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 Earnings Call Summary

Earnings Call Date:Apr 29, 2025
(Q1-2025)
|
% Change Since: -8.14%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong backlog and community growth, as well as strategic initiatives like sales training and stock buybacks. However, these positives were offset by declines in revenue and gross margin, increased expenses, and ongoing challenges with affordability and market conditions.
Q1-2025 Updates
Positive Updates
Strong Backlog at Quarter End
LGI Homes ended March with 1,040 homes in backlog, representing over $406 million, indicating a strong pipeline moving into the second quarter of 2025.
Increase in Active Communities
LGI Homes increased their number of communities by 22% year-over-year, ending the first quarter with 146 active communities.
Sales Training Initiatives
The company conducted intensive sales training for sales leaders to enhance sales team performance across the country, aiming for improved results in challenging market conditions.
Stock Buyback Program
LGI Homes repurchased 41,685 shares of common stock for $3.1 million and has $177.7 million remaining on the current stock buyback authorization.
Credit Facility Recast
The company successfully recast its credit agreement, extending maturity from 2028 to 2029, providing greater financial flexibility.
Negative Updates
Decrease in Revenue and Home Closings
Revenue decreased by 10.1% year-over-year due to an 8% decline in home closings and a 2.2% decrease in the average sales price.
One-Time Expense Impact
A one-time expense of $8.6 million related to the forward commitment incentive program negatively impacted revenue and gross margins.
Decline in Gross Margin
First quarter gross margin was 21%, down from 23.4% in the previous year, affected by several factors including increased wholesale closings and higher construction overhead.
Increased SG&A Expenses
Selling, general, and administrative expenses rose to $73.5 million, or 20.9% of revenue, up from 18.6% in the prior year, driven by higher advertising and personnel costs.
Challenges with Affordability and Rate Volatility
Affordability remains a significant challenge due to persistently high mortgage rates, impacting buyer confidence and sales.
Company Guidance
During LGI Homes, Inc.'s first quarter 2025 earnings call, the company provided several key metrics and guidance for future performance. They delivered 996 homes at an average sales price of $352,831, generating first-quarter revenue of $351.4 million. Despite a 10.1% year-over-year revenue decline due to an 8% decrease in home closings and a 2.2% reduction in average sales price, LGI Homes ended the quarter with a backlog of 1,040 homes valued at over $406 million. The company reported a gross margin of 21% and an adjusted gross margin of 23.6%. They maintained their full-year guidance, expecting to close between 6,200 and 7,000 homes across 160 to 170 active communities by year-end, with average selling prices ranging from $360,000 to $370,000. They anticipate a full-year gross margin between 21.7% and 23.2% and an adjusted gross margin between 24% and 25.5%. The call also noted a one-time expense of $8.6 million related to a forward commitment incentive program, impacting first-quarter results.

LGI Homes Financial Statement Overview

Summary
LGI Homes demonstrates stable margins and balanced leverage but struggles with revenue growth and cash flow management. While profitability ratios are reasonable, the challenges in cash flow generation and declining revenues need attention to improve financial performance.
Income Statement
65
Positive
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
70
Positive
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
50
Neutral
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue2.16B2.20B2.36B2.30B3.05B2.37B
Gross Profit515.60M533.29M542.19M646.60M818.03M603.10M
EBITDA201.09M212.15M235.66M391.68M548.85M370.29M
Net Income183.01M196.07M199.23M326.57M429.64M323.89M
Balance Sheet
Total Assets3.89B3.76B3.41B3.12B2.35B1.83B
Cash, Cash Equivalents and Short-Term Investments57.60M53.20M48.98M32.00M50.51M35.94M
Total Debt1.62B1.48B1.36B1.26B805.24M538.40M
Total Liabilities1.85B1.72B1.55B1.48B956.02M687.08M
Stockholders Equity2.04B2.04B1.86B1.64B1.40B1.14B
Cash Flow
Free Cash Flow-173.18M-145.69M-58.41M-371.64M19.97M199.47M
Operating Cash Flow-171.39M-143.74M-56.97M-370.45M21.70M202.16M
Investing Cash Flow13.36M15.62M-13.65M-5.97M-70.39M-5.65M
Financing Cash Flow166.64M132.34M87.60M357.90M63.26M-198.91M

LGI Homes Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price54.43
Price Trends
50DMA
53.32
Positive
100DMA
61.87
Negative
200DMA
82.11
Negative
Market Momentum
MACD
0.18
Negative
RSI
55.71
Neutral
STOCH
80.26
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LGIH, the sentiment is Neutral. The current price of 54.43 is above the 20-day moving average (MA) of 51.04, above the 50-day MA of 53.32, and below the 200-day MA of 82.11, indicating a neutral trend. The MACD of 0.18 indicates Negative momentum. The RSI at 55.71 is Neutral, neither overbought nor oversold. The STOCH value of 80.26 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TPTPH
80
Outperform
$2.99B7.3413.28%10.82%19.34%
DFDFH
79
Outperform
$2.44B8.1526.25%21.18%11.40%
HOHOV
76
Outperform
$637.18M4.0128.55%7.93%-3.59%
BZBZH
71
Outperform
$714.55M7.627.97%13.50%-40.36%
CCCCS
68
Neutral
$1.82B6.1712.36%1.94%10.75%8.31%
63
Neutral
$1.27B7.029.36%-4.37%-3.17%
62
Neutral
$16.85B11.50-7.38%2.96%1.59%-23.36%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
LGIH
LGI Homes
54.43
-32.55
-37.42%
BZH
Beazer Homes
23.58
-3.32
-12.34%
HOV
Hovnanian Enterprises
113.33
-28.33
-20.00%
TPH
Tri Pointe
32.98
-3.67
-10.01%
CCS
Century Communities
59.67
-18.81
-23.97%
DFH
Dream Finders Homes
26.12
0.77
3.04%

LGI Homes Corporate Events

Executive/Board ChangesShareholder MeetingsBusiness Operations and Strategy
LGI Homes Elects Directors and Amends Stock Plan
Neutral
Apr 29, 2025

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.

Financial Disclosures
LGI Homes Reports Strong Q1 2025 Financial Results
Positive
Apr 29, 2025

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jun 28, 2025