tiprankstipranks
Trending News
More News >
Landsea Homes (LSEA)
NASDAQ:LSEA

Landsea Homes (LSEA) AI Stock Analysis

Compare
97 Followers

Top Page

LS

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)

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
72
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
65
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
68
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.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
1.55B1.21B1.45B1.02B734.61M
Gross Profit
227.79M214.97M286.92M182.60M94.87M
EBIT
27.46M40.28M108.29M59.49M4.17M
EBITDA
34.04M45.39M113.84M64.89M7.75M
Net Income Common Stockholders
17.23M29.24M73.55M52.79M-9.08M
Balance SheetCash, Cash Equivalents and Short-Term Investments
53.32M119.56M123.63M342.81M105.78M
Total Assets
1.70B1.47B1.44B1.27B895.76M
Total Debt
779.28M556.84M505.42M474.31M264.81M
Net Debt
725.96M437.29M381.79M131.50M159.03M
Total Liabilities
1.03B782.88M730.18M644.12M366.28M
Stockholders Equity
667.18M652.88M655.95M620.15M528.18M
Cash FlowFree Cash Flow
23.74M19.69M10.53M30.22M-2.60M
Operating Cash Flow
29.60M27.17M15.99M33.40M-806.93K
Investing Cash Flow
-240.90M-7.48M-263.62M-25.58M52.97M
Financing Cash Flow
145.07M-23.77M28.00M225.38M-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
AXAXR
79
Outperform
$106.49M8.2910.82%30.36%481.87%
FPFPH
74
Outperform
$586.17M4.5612.27%11.66%78.44%
70
Outperform
$409.61M42.151.50%24.15%-60.70%
FOFOR
70
Outperform
$1.01B5.9310.81%-5.60%-17.86%
61
Neutral
$2.82B10.840.42%8439.00%5.74%-20.95%
ARARL
55
Neutral
$233.24M-2.20%-6.48%-592.10%
OZOZ
$247.14M-9.30%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
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%
OZ
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.