LGI Homes (LGIH) AI Stock Analysis

• Market Cap: $1.33B
• Dividend Yield: N/A
• Average Volume (3M): 376.72K
• Price to Earnings (P/E): 6.8
• Beta (1Y): 1.41
• Revenue Growth: -6.61%
• EPS Growth: -1.56%
• Country: US
• Employees: 1,170
• Sector: Consumer Cyclical
• Sector Strength: 63
• Industry: Residential Construction
• EPS (TTM): 8.31
• Shares Outstanding: 23,397,074
• 10 Day Avg. Volume: 465,091
• 30 Day Avg. Volume: 376,719
• PEG Ratio: 1.09
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.75
• Price to Cash Flow (P/CF): 7.30
• P/FCF Ratio: 7.40
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $106.67
• Price Target Upside: 86.39% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

LGI Homes is facing significant financial challenges with declining revenues and profits, increased debt, and cash flow issues, resulting in a below-average financial performance score. Technical indicators suggest a bearish trend, further weighing on the overall score. Despite these challenges, the stock's valuation appears attractive, with a low P/E ratio indicating potential upside. Earnings call analysis highlights both positive strategic achievements and potential market risks, providing a balanced outlook.

Positive Factors

Community Expansion

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

Growth 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

Financial 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.

Market Conditions

Deliveries, gross margin, and SG&A/sales all missed previous estimates, highlighting the challenging environment given the rate curve and buyer affordability issues.

Sales Performance

Order growth of only 8% was significantly below the 35% expectation.

LGI Homes Business Overview & Revenue Model

Company Description

LGI Homes, Inc. (LGIH) is a residential construction company specializing in the design, construction, and sale of new homes across the United States. The company primarily targets first-time homebuyers and is known for its high-quality, affordable homes in attractive locations. LGI Homes operates in multiple states and offers a variety of home designs with a focus on energy efficiency and modern amenities.

How the Company Makes Money

LGI Homes generates revenue primarily through the construction and sale of single-family homes. The company's revenue model is centered around acquiring land, developing residential communities, and selling completed homes to customers. LGI Homes typically purchases land in desirable locations, often in suburban areas with access to major metropolitan centers, and then develops these plots into fully built communities. The company sells homes directly to consumers, with a focus on affordability and quality, appealing mainly to first-time homebuyers. Additional revenue streams may include mortgage origination services, where LGI Homes assists buyers in securing financing for their home purchases. The company's earnings are influenced by factors such as housing market conditions, interest rates, availability of credit, and demographic trends that drive demand for entry-level housing.

LGI Homes Financial Statement Overview

Summary

LGI Homes is facing financial challenges with declining revenue, decreased net income, and negative cash flow, indicating potential liquidity issues. Although the balance sheet shows some equity stability, the overall financial health needs improvement.

Income Statement

LGI Homes shows a declining revenue trend with a significant drop in total revenue in 2024, indicating potential market or operational challenges. The gross profit margin was not calculable for 2024 due to zero revenue. Net income has decreased from previous years, impacting net profit margins. EBIT and EBITDA margins have also seen a decline, suggesting reduced operational efficiency.

Balance Sheet

The company has a moderately high debt-to-equity ratio, indicating reliance on debt financing. However, stockholders' equity has grown over time, which is a positive sign. The equity ratio is satisfactory, showing a relatively stable asset structure compared to liabilities, despite increasing total debt.

Cash Flow

LGI Homes faces challenges in cash flow management, with negative operating and free cash flows in 2024. Free cash flow growth has been negative, highlighting potential liquidity issues. The operating cash flow to net income ratio is negative, pointing to inefficiencies in converting income to cash.

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
	EBIT
212.15M	233.25M	390.11M	547.70M	364.71M
	EBITDA
212.15M	235.66M	391.68M	548.85M	370.29M
	Net Income Common Stockholders
196.07M	199.23M	326.57M	429.64M	323.89M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
53.20M	48.98M	32.00M	50.51M	35.94M
	Total Assets
3.76B	3.41B	3.12B	2.35B	1.83B
	Total Debt
1.48B	1.36B	1.26B	805.24M	538.40M
	Net Debt
1.43B	1.31B	1.23B	754.72M	502.46M
	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: Negative
• Last Price: 57.23
• 50DMA: Negative
• 100DMA: Negative
• 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 Negative. The current price of 57.23 is below the 20-day moving average (MA) of 65.62, below the 50-day MA of 73.32, and below the 200-day MA of 95.51, indicating a bearish trend. The MACD of -4.78 indicates Positive momentum. The RSI at 32.78 is Neutral, neither overbought nor oversold. The STOCH value of 23.29 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LGIH.

LGI Homes Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CCS	73 Outperform	$1.81B	5.69	13.33%	1.81%	18.17%	30.51%
TPH	72 Outperform	$2.68B	6.06	14.43%	―	20.93%	39.33%
DFH	68 Neutral	$2.02B	6.74	27.19%	―	18.74%	13.43%
HOV	67 Neutral	$543.80M	2.77	33.63%	―	8.88%	19.66%
BZH	61 Neutral	$568.83M	4.64	10.32%	―	12.27%	-22.28%
Sector *	59 Neutral	$11.53B	10.43	-0.21%	4.02%	1.19%	-15.83%
LGIH	50 Neutral	$1.33B	6.82	10.07%	―	-6.61%	-1.56%

LGI Homes Corporate Events

LGI Homes Reports Strong 2024 Financial Results

LGI Homes reported its financial results for the fourth quarter and full year 2024, highlighting a strong finish despite a mixed macroeconomic environment. The company achieved full-year closings of 6,131 homes and increased its active communities by 29.1% to a record 151. While home sales revenues decreased by 6.6% to $2.2 billion, the average sales price per home rose by 4.2% to $365,394. Looking ahead to 2025, LGI Homes projects home closings between 6,200 and 7,000, with a focus on maintaining profitability through strategic investments and operational discipline.