LGI Homes (LGIH) AI Stock Analysis

• Market Cap: $1.51B
• Dividend Yield: N/A
• Average Volume (3M): 418.35K
• Price to Earnings (P/E): 10.1
• Beta (1Y): 1.32
• Revenue Growth: -7.89%
• EPS Growth: -19.53%
• Country: US
• Employees: 1,000
• Sector: Consumer Cyclical
• Sector Strength: 83
• Industry: Residential Construction
• EPS (TTM): 1.36
• Shares Outstanding: 23,056,635
• 10 Day Avg. Volume: 424,512
• 30 Day Avg. Volume: 418,348
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.91
• Enterprise Value/Revenue: 1.41
• Enterprise Value/Gross Profit: 6.07
• Enterprise Value/Ebitda: 15.43
• 1Y Price Target: $69.80
• Price Target Upside: 4.16% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

• Rating: 68 Neutral
• Price Target: $66.00 ▼(-1.51% Downside)

LGI Homes' overall score is driven by its undervalued valuation and positive technical indicators, despite challenges in financial performance. The company's operational efficiency and strategic initiatives provide some optimism, but declining revenue and cash flow issues weigh on the score.

Positive Factors

Future Earnings Potential

Incremental improvement to the selling environment should combine with continued expansion in community count into the out years to ramp earnings and drive the stock.

Valuation

Valuation attractive. 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

Delivery 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.

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.

Operating Margins

The decline reflects a slower sales pace and lower operating margins.

Sales Performance

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 sale of newly constructed homes. The company's revenue model is centered on building and selling homes in various communities, where they typically acquire land, develop it, and construct homes for sale. Key revenue streams include home sales, which make up the majority of their earnings, and ancillary services such as mortgage financing and title services offered through their subsidiaries. Additionally, LGI Homes benefits from strategic partnerships with local suppliers and subcontractors, which help manage construction costs and improve efficiency. The company's focus on entry-level homes allows it to tap into a significant market segment, especially during periods of favorable economic conditions and low mortgage rates. Overall, LGI Homes' revenue is closely tied to housing market trends, consumer demand for homes, and the overall economic environment.

LGI Homes Financial Statement Overview

Summary

LGI Homes is facing challenges with declining revenue growth, reduced profit margins, and increased leverage. Despite stable operational efficiency, the company struggles with cash flow management, which is crucial for maintaining financial health in the residential construction industry.

Income Statement

LGI Homes has experienced a decline in revenue growth, with a negative growth rate of -5.50% in the TTM period. The gross profit margin has decreased to 23.25% from 24.21% in the previous year, indicating pressure on cost management. Net profit margin also declined to 7.63% from 8.90%, reflecting reduced profitability. However, the company maintains a stable EBIT margin of 9.06% and EBITDA margin of 9.15%, suggesting operational efficiency despite revenue challenges.

Balance Sheet

The debt-to-equity ratio increased to 0.86 in the TTM period, indicating higher leverage compared to previous years. Return on equity has decreased to 7.67%, reflecting reduced profitability on shareholders' equity. However, the equity ratio remains stable at 51.37%, suggesting a balanced capital structure. The company should monitor its debt levels to maintain financial stability.

Cash Flow

LGI Homes faces challenges with negative operating cash flow and free cash flow in the TTM period. The operating cash flow to net income ratio is negative, indicating cash flow issues relative to earnings. However, the free cash flow to net income ratio is slightly above 1, suggesting that free cash flow aligns with net income. The company needs to improve cash flow generation to support operations and growth.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.04B	2.20B	2.36B	2.30B	3.05B	2.37B
Gross Profit	475.32M	533.29M	542.19M	646.60M	818.03M	603.10M
EBITDA	187.05M	212.15M	235.66M	391.68M	548.85M	370.29M
Net Income	155.97M	196.07M	199.23M	326.57M	429.64M	323.89M
Balance Sheet
Total Assets	4.01B	3.76B	3.41B	3.12B	2.35B	1.83B
Cash, Cash Equivalents and Short-Term Investments	59.56M	53.20M	48.98M	32.00M	50.51M	35.94M
Total Debt	1.77B	1.48B	1.25B	1.12B	810.57M	543.68M
Total Liabilities	1.95B	1.72B	1.55B	1.48B	956.02M	687.08M
Stockholders Equity	2.06B	2.04B	1.86B	1.64B	1.40B	1.14B
Cash Flow
Free Cash Flow	-175.83M	-145.69M	-58.41M	-371.64M	19.97M	199.47M
Operating Cash Flow	-174.28M	-143.74M	-56.97M	-370.45M	21.70M	202.16M
Investing Cash Flow	20.62M	15.62M	-13.65M	-5.97M	-70.39M	-5.65M
Financing Cash Flow	162.15M	132.34M	87.60M	357.90M	63.26M	-198.91M

LGI Homes Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 67.01
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• 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 67.01 is above the 20-day moving average (MA) of 63.45, above the 50-day MA of 58.21, and below the 200-day MA of 70.63, indicating a neutral trend. The MACD of 1.77 indicates Positive momentum. The RSI at 61.38 is Neutral, neither overbought nor oversold. The STOCH value of 56.69 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	79 Outperform	$3.18B	9.25	11.38%	―	-3.59%	-10.82%
HOV	79 Outperform	$826.69M	7.26	20.08%	―	7.97%	-35.64%
DFH	74 Outperform	$2.67B	9.72	23.25%	―	20.18%	-1.04%
CCS	73 Outperform	$2.03B	7.96	10.34%	1.62%	3.76%	-17.55%
LGIH	68 Neutral	$1.51B	10.11	7.84%	―	-7.89%	-19.53%
BZH	65 Neutral	$771.98M	11.78	5.65%	―	9.97%	-52.57%
Sector *	61 Neutral	$17.97B	12.87	-5.30%	2.97%	1.26%	-14.45%

LGI Homes Corporate Events

LGI Homes Reports Q2 2025 Financial Results

LGI Homes, Inc. reported its financial results for the second quarter of 2025, highlighting a revenue of $483.5 million from 1,323 home sales at an average price of $365,446. Despite challenges such as interest rates affecting affordability, the company managed to increase its gross margin and repurchased 367,568 shares of stock. While withdrawing its full-year guidance due to market uncertainties, LGI Homes remains optimistic about the housing market’s long-term prospects, driven by strong demographics and a shortage of new homes.