Landsea Homes (LSEA) AI Stock Analysis

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Landsea Homes

(NASDAQ:LSEA)

Rating:70Outperform

Price Target:

$12.50

▲(10.91%Upside)

Landsea Homes' strong revenue growth and strategic merger position it well within the real estate industry. However, challenges such as high valuation, profitability issues, and market volatility, as indicated by mixed earnings results, temper the outlook. The technical indicators show bullish momentum, but caution is advised due to overbought conditions. The merger agreement provides a positive strategic direction, potentially enhancing future growth prospects.

Landsea Homes (LSEA) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$409.61M

Dividend YieldN/A

Average Volume (3M)1.75M

Price to Earnings (P/E)42.1

Beta (1Y)1.63

Revenue Growth24.15%

EPS Growth-60.70%

CountryUS

Employees555

SectorReal Estate

Sector Strength63

IndustryReal Estate - Development

Share Statistics

EPS (TTM)-0.20

Shares Outstanding36,409,560

10 Day Avg. Volume926,924

30 Day Avg. Volume1,747,567

Financial Highlights & Ratios

PEG Ratio-0.40

Price to Book (P/B)0.36

Price to Sales (P/S)0.00

P/FCF Ratio-186.75

Enterprise Value/Market Cap2.35

Enterprise Value/Revenue0.17

Enterprise Value/Gross Profit4.23

Enterprise Value/Ebitda5.75

Forecast

1Y Price Target

$11.15

Price Target Upside-1.06% Downside

Rating ConsensusHold

Number of Analyst Covering4

Landsea Homes Business Overview & Revenue Model

Company DescriptionLandsea Homes Corporation designs, constructs, markets, and sells suburban and urban single-family detached and attached homes in California, Arizona, Florida, Texas, and Metro New York. It offers a range of properties, including entry-level and first-time move-up homes. The company was incorporated in 2017 and is headquartered in Newport Beach, California. Landsea Homes Corporation is a subsidiary of Landsea Holdings Corporation.

How the Company Makes MoneyLandsea Homes generates revenue primarily through the sale of residential properties. The company's revenue model involves acquiring land, developing it into residential communities, and selling the completed homes to consumers. Key revenue streams include home sales, land development, and potentially, construction services. Landsea Homes may also benefit from strategic partnerships with local contractors and suppliers to optimize its building processes and reduce costs. Additionally, by focusing on sustainability and quality in home design, the company can attract environmentally conscious buyers, contributing to its income.

Landsea Homes Earnings Call Summary

Earnings Call Date:May 13, 2025

(Q1-2025)

% Change Since: 60.54%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Neutral

The earnings call reflects mixed performance, with notable increases in home sales revenue and deliveries, and successful strategic shifts towards presold homes. However, these are counterbalanced by a net loss, decline in average closing prices, and pressure on gross margins. Demand conditions remain uneven, requiring continued use of incentives.

Q1-2025 Updates

Positive Updates

Increase in Home Sales Revenue and Deliveries

Home sales revenue increased 2% year-over-year on a 27% increase in deliveries. Florida delivered strong 52% delivery growth and 53% revenue growth, while Texas had 126 deliveries and $48 million in home sales revenue.

Positive Demand Trends

Net new orders for the quarter increased 11% year-over-year, with a sales pace of 3.0 homes per community per month. This was attributed to demand elasticity as buyers responded to declines in mortgage rates and higher incentives.

Strategic Shift Towards Presold Homes

67% of first quarter deliveries were sold in the same quarter, with a goal to achieve a 50-50 split between spec and build-to-order homes. This shift aims to increase margin opportunities and reduce cash tied up in inventory.

Operational Efficiencies and Cost Management

Build times have returned to pre-COVID levels, leading to faster backlog conversions. Lot cost inflation remains a challenge, but success in renegotiating lot takedown terms provides some optimism for future land prices.

Negative Updates

Net Loss in the First Quarter

Landsea Homes recorded a net loss of $7.3 million or $0.20 per diluted share. On an adjusted basis, the net loss was $1.73 million or $0.05 per share.

Decline in Average Closing Prices

There was a 20% decline in average closing prices due to a mix shift from higher-priced California communities to Florida and Texas, and elevated incentive activities.

Gross Margin Pressure

Discounts and incentives weighed on gross margins, representing 9.6% of gross home sales revenue. The home sales gross margin before inventory impairments was 13.5%, with impairments further impacting margins.

Uneven New Home Demand Conditions

Current new home demand conditions were described as uneven, with consistent traffic levels offset by buyer hesitancy, requiring incentives and pricing adjustments to maintain conversion levels.

Company Guidance

During the Landsea Homes Corporation First Quarter 2025 Earnings Call, several key metrics were highlighted. The company recorded a net loss of $7.3 million, or $0.20 per diluted share, despite an 11% increase in net new orders and a 2% rise in home sales revenue, attributed to a 27% increase in deliveries. The average closing price decreased by 20%, due in part to a shift in sales from high-priced California communities to more affordable regions like Florida and Texas, where ASPs actually grew year-over-year. Incentives, which accounted for 9% of the average closing price, were a significant factor in the margin compression. Sales pace was at the lower end of the targeted range at 3.0 homes per community per month, with Arizona leading the absorption rate at 3.8. Landsea Homes ended the quarter with $256 million in liquidity, including $52.3 million in cash, while maintaining a debt to total capital ratio of 52.1%.

Landsea Homes Financial Statement Overview

Summary

Landsea Homes exhibits strong revenue growth and improved leverage, positioning it well within the real estate industry. Despite challenges in maintaining profit margins and asset management, the company's cash flow generation and strategic reinvestments indicate a forward-focused growth strategy.

Income Statement

Positive

Landsea Homes shows a strong revenue growth trend, increasing from $630.99M in 2019 to $1.55B in 2024. However, the net profit margin has decreased over the years, from 2.72% in 2019 to 1.11% in 2024. The gross profit margin has remained relatively stable, but the EBIT margin has fluctuated, indicating some operational challenges. Despite these fluctuations, the company's top-line growth is a positive indicator.

Balance Sheet

Positive

The balance sheet reflects a solid equity base, with stockholders' equity increasing over the period. The debt-to-equity ratio improved significantly in 2024, with no total debt reported, which strengthens the financial position. However, the equity ratio has slightly decreased, indicating a need for better asset management. Overall, the reduction in leverage is a positive sign but requires sustained performance.

Cash Flow

Positive

Landsea Homes has shown consistent free cash flow generation, with a positive trajectory from negative figures in 2020. The operating cash flow to net income ratio suggests efficient cash generation relative to earnings, although it has fluctuated. The free cash flow growth rate is positive, indicating sound cash management practices. However, the large negative investing cash flow in 2024 suggests aggressive reinvestment strategies.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.55B	1.21B	1.45B	1.02B	734.61M
	Gross Profit
227.79M	214.97M	286.92M	182.60M	94.87M
	EBIT
27.46M	40.28M	108.29M	59.49M	4.17M
	EBITDA
34.04M	45.39M	113.84M	64.89M	7.75M
	Net Income Common Stockholders
17.23M	29.24M	73.55M	52.79M	-9.08M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
53.32M	119.56M	123.63M	342.81M	105.78M
	Total Assets
1.70B	1.47B	1.44B	1.27B	895.76M
	Total Debt
779.28M	556.84M	505.42M	474.31M	264.81M
	Net Debt
725.96M	437.29M	381.79M	131.50M	159.03M
	Total Liabilities
1.03B	782.88M	730.18M	644.12M	366.28M
	Stockholders Equity
667.18M	652.88M	655.95M	620.15M	528.18M
Cash Flow		Free Cash Flow
23.74M	19.69M	10.53M	30.22M	-2.60M
	Operating Cash Flow
29.60M	27.17M	15.99M	33.40M	-806.93K
	Investing Cash Flow
-240.90M	-7.48M	-263.62M	-25.58M	52.97M
	Financing Cash Flow
145.07M	-23.77M	28.00M	225.38M	-52.26M

Landsea Homes Technical Analysis

Technical Analysis Sentiment

Positive

Last Price11.27

Price Trends

50DMA

7.78

Positive

100DMA

7.80

Positive

200DMA

9.44

Positive

Market Momentum

MACD

1.12

Positive

RSI

84.17

Negative

STOCH

22.55

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LSEA, the sentiment is Positive. The current price of 11.27 is above the 20-day moving average (MA) of 10.28, above the 50-day MA of 7.78, and above the 200-day MA of 9.44, indicating a bullish trend. The MACD of 1.12 indicates Positive momentum. The RSI at 84.17 is Negative, neither overbought nor oversold. The STOCH value of 22.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LSEA.

Landsea Homes Risk Analysis

Landsea Homes disclosed 51 risk factors in its most recent earnings report. Landsea 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

Landsea Homes Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AXR	79 Outperform	$106.49M	8.29	10.82%	―	30.36%	481.87%
FPH	74 Outperform	$586.17M	4.56	12.27%	―	11.66%	78.44%
LSEA	70 Outperform	$409.61M	42.15	1.50%	―	24.15%	-60.70%
FOR	70 Outperform	$1.01B	5.93	10.81%	―	-5.60%	-17.86%
Sector *	61 Neutral	$2.82B	10.84	0.42%	8439.00%	5.74%	-20.95%
ARL	55 Neutral	$233.24M	―	-2.20%	―	-6.48%	-592.10%
OZ		$247.14M	―	-9.30%	―	―	―

* Real Estate Sector Average

Performance Comparison

LSEA

Landsea Homes

11.27

1.30

13.04%

ARL

American Realty Investors

14.87

0.77

5.46%

AXR

Amrep

20.06

-0.94

-4.48%

FOR

Forestar Group

19.58

-12.89

-39.70%

FPH

Five Point Holdings

5.68

2.61

85.02%

Belpointe PREP

65.01

6.61

11.32%

Landsea Homes Corporate Events

Private Placements and FinancingM&A Transactions

Landsea Homes Amends Senior Notes Indenture

Neutral

Jun 2, 2025

On May 29, 2025, Landsea Homes Corporation, along with certain subsidiary guarantors and U.S. Bank Trust Company, entered into a Third Supplemental Indenture to amend the terms of their 8.875% Senior Notes due 2029. The amendments, which received consents from 97.95% of noteholders, eliminate the obligation to make a ‘change of control offer’ related to a proposed merger, remove most restrictive covenants, and alter certain default provisions. These changes will become operative once the notes are accepted for purchase, contingent on the completion of the merger and financing conditions.

The most recent analyst rating on (LSEA) stock is a Hold with a $10.00 price target. To see the full list of analyst forecasts on Landsea Homes stock, see the LSEA Stock Forecast page.

Delistings and Listing ChangesM&A Transactions

Landsea Homes Announces $1.2 Billion Merger Agreement

Positive

May 13, 2025

On May 12, 2025, Landsea Homes Corporation entered into a merger agreement with New Home Co., a portfolio company of Apollo Global Management. The merger, valued at approximately $1.2 billion, will see New Home acquire Landsea Homes for $11.30 per share in cash, representing a 61% premium on the closing share price. This transaction aims to create a top-25 national homebuilder with a diverse range of housing options across high-growth markets in the U.S. The merger is expected to close in the third quarter of 2025, subject to customary conditions, and will result in Landsea Homes becoming a privately held company.

The most recent analyst rating on (LSEA) stock is a Hold with a $10.00 price target. To see the full list of analyst forecasts on Landsea Homes stock, see the LSEA Stock Forecast page.

Executive/Board ChangesShareholder Meetings

Landsea Homes Faces Board Nomination Challenge in 2025

Neutral

Mar 5, 2025

On March 5, 2025, Landsea Homes Corporation announced that its Board of Directors received a letter from Mill Road Capital III, L.P., indicating its intention to nominate three director candidates for election at the company’s 2025 Annual Meeting of Stockholders. The Board will review these nominations and provide recommendations in the proxy materials for the meeting. This development reflects ongoing shareholder engagement and the company’s commitment to creating value for stakeholders.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.