Download PDF

1. Company Snapshot

1.a. 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.

Show Full description

1.b. Last Insights on LGIH

Breaking News: LGI Homes Inc reported a challenging Q4 2025 with revenue dropping to $474 million and EPS falling to $0.75. The company faces industry headwinds and a spike in cancellation rates to 43.3%. Elevated leverage and a risk profile make LGIH unattractive. Despite a surge in backlog much of it is tied to a single wholesale agreement. 2026 guidance implies further volume and price pressure. Analysts recommend a sell based on these factors and industry challenges.

1.c. Company Highlights

2. LGI Homes' Q4 2025 Earnings: A Closer Look

LGI Homes reported revenue of $474 million in Q4 2025, driven by the delivery of 1,301 homes. The company's gross margin before inventory-related charges was 19.2%, while adjusted gross margin was 22.3%. Earnings per share (EPS) came in at $0.75, slightly below analyst estimates. For the full year, the company delivered 4,788 homes, generating revenue of $1.7 billion and a gross margin of 21.1%. The average selling price was $364,000, down slightly due to geographic mix and targeted discounts.

Publication Date: Feb -22

📋 Highlights
  • Revenue & Home Deliveries:: Q4 revenue reached $474 million from 1,301 homes delivered, with 1,362 total homes delivered for the quarter.
  • Gross Margin Performance:: Q4 gross margin before inventory charges was 19.2%, while adjusted gross margin hit 22.3%.
  • Backlog Growth:: Net orders surged 39% YoY, and backlog increased 133% to 1,394 homes.
  • Debt & Liquidity:: Debt-to-capital ratio stood at 43.2%, with $335 million in liquidity and $70,000 average finished lot cost.
  • 2026 Guidance:: 4,600–5,400 home closings forecasted, with gross margin expected between 18–20% and adjusted margin 21–23%.

Operational Highlights

The company ended the year with 144 active communities and averaged 3.1 closings per community per month in the fourth quarter. Net orders increased 39% year-over-year, and the backlog grew 133% to 1,394 homes. The company's lot position remains a key strategic advantage, with an average finished lot cost of approximately $70,000 and 60,842 lots owned or controlled at year-end.

Guidance and Outlook

LGI Homes expects to close between 4,600 and 5,400 homes in 2026, with an average sales price between $355,000 and $365,000. Gross margin is expected to be between 18% and 20%, and adjusted gross margin between 21% and 23%. The company plans to continue investing in people, land, and operating platforms to support its long-term strategy. To achieve the higher end of the gross margin range, the company would need incentives to come down, or other factors like lower labor costs or better land cost basis to drive improvement.

Valuation and Growth Prospects

With a P/E Ratio of 17.65 and an expected revenue growth rate of 14.3% next year, LGI Homes appears to be reasonably valued. The company's ROE of 3.51% and ROIC of 1.58% indicate room for improvement in terms of profitability. The actual EPS of $0.97 for the full year was slightly above estimates of $0.96, demonstrating the company's ability to meet expectations. As the company continues to work through older inventory, selectively monetize lot positions, and reduce debt, investors will be watching to see if LGI Homes can achieve its guidance and drive long-term growth.

Operational Challenges

The company is facing challenges in the current market, including elevated cancellation rates due to financing issues and the need for aggressive discounting to address affordability concerns. However, LGI Homes is working to assist buyers with affordability, including incentives, to create a win-win situation. The mix of first-time versus move-up buyers is growing, with move-up buyers increasing due to the Terrata brand expansion and higher price points.

3. NewsRoom

Card image cap

LGI Homes Q4 Earnings Call Highlights

Feb -19

Source: defenseworld.net

Card image cap

LGI Homes: Industry Challenges And High Leverage Make This Prospect Scary

Feb -18

Source: seekingalpha.com

Card image cap

LGI Homes, Inc. (LGIH) Q4 2025 Earnings Call Transcript

Feb -17

Source: seekingalpha.com

Card image cap

The Best Homebuilding Stocks for 2026

Feb -11

Source: fool.com

Card image cap

LGI Homes, Inc. Reports January 2026 Home Closings

Feb -04

Source: globenewswire.com

Card image cap

LGI Homes, Inc. (NASDAQ:LGIH) Receives $76.70 Consensus Target Price from Analysts

Feb -02

Source: defenseworld.net

Card image cap

LGI Homes Announces New Community in the Modesto, California Market

Jan -30

Source: globenewswire.com

Card image cap

LGI Homes Celebrates Opening of New Community Park at Vista West in Fort Worth

Jan -26

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.44%)

6. Segments

Retail Home

Expected Growth: 8.5%

LGI Homes' Retail Home segment growth of 8.5% is driven by increasing demand for affordable housing, strategic expansion into new markets, and a focus on customer service. Additionally, the company's efficient construction process and cost-effective land acquisition strategy contribute to its growth. Furthermore, the segment benefits from a strong brand reputation and a wide range of floor plans and pricing options.

Wholesale Home

Expected Growth: 7.77%

LGI Homes' Wholesale Home segment growth of 7.77% is driven by increasing demand for affordable housing, strategic partnerships with national homebuilders, and expansion into new markets. Additionally, the company's focus on providing high-quality homes at competitive prices, coupled with its efficient construction process, has enabled it to capitalize on the growing trend of institutional investors entering the single-family rental market.

7. Detailed Products

New Home Construction

LGI Homes, Inc. builds and sells new single-family homes in various communities across the United States.

Entry-Level Homes

LGI Homes, Inc. offers affordable, entry-level homes designed for first-time homebuyers and those on a budget.

Move-Up Homes

LGI Homes, Inc. builds and sells larger, more luxurious homes for growing families or those looking to upgrade.

Active Adult Communities

LGI Homes, Inc. develops and sells homes in age-restricted communities designed for active adults aged 55 and older.

Land Acquisition and Development

LGI Homes, Inc. acquires and develops land for future home construction, ensuring a steady supply of new homes.

8. LGI Homes, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for LGI Homes, Inc. is medium due to the presence of alternative housing options such as apartments and condominiums. However, the company's focus on affordable and quality homes reduces the threat of substitutes.

Bargaining Power Of Customers

The bargaining power of customers is low due to the fragmented nature of the homebuying market. LGI Homes, Inc. has a strong brand presence and a wide range of home designs, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the presence of a few large suppliers of building materials. However, LGI Homes, Inc. has established relationships with its suppliers, reducing the bargaining power of suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the homebuilding industry. LGI Homes, Inc. has a strong brand presence and established relationships with suppliers, making it difficult for new entrants to compete.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established homebuilders in the market. LGI Homes, Inc. competes with other homebuilders on factors such as price, quality, and location, increasing the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 42.25%
Debt Cost 8.48%
Equity Weight 57.75%
Equity Cost 13.27%
WACC 11.25%
Leverage 73.15%

11. Quality Control: LGI Homes, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
The Cheesecake Factory

A-Score: 4.9/10

Value: 4.6

Growth: 4.9

Quality: 4.7

Yield: 4.0

Momentum: 5.0

Volatility: 6.3

1-Year Total Return ->

View Full Report
Stock-Card
Legacy Housing

A-Score: 4.7/10

Value: 6.4

Growth: 5.8

Quality: 7.9

Yield: 0.0

Momentum: 2.0

Volatility: 6.3

1-Year Total Return ->

View Full Report
Stock-Card
Hovnanian

A-Score: 3.8/10

Value: 9.5

Growth: 3.7

Quality: 5.9

Yield: 0.0

Momentum: 2.0

Volatility: 2.0

1-Year Total Return ->

View Full Report
Stock-Card
Beazer Homes USA

A-Score: 3.8/10

Value: 8.9

Growth: 2.8

Quality: 4.9

Yield: 0.0

Momentum: 2.0

Volatility: 4.0

1-Year Total Return ->

View Full Report
Stock-Card
LGI Homes

A-Score: 3.4/10

Value: 7.2

Growth: 3.7

Quality: 5.2

Yield: 0.0

Momentum: 1.0

Volatility: 3.3

1-Year Total Return ->

View Full Report
Stock-Card
United Homes

A-Score: 2.6/10

Value: 8.6

Growth: 2.8

Quality: 3.6

Yield: 0.0

Momentum: 0.0

Volatility: 0.7

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

55.46$

Current Price

55.46$

Potential

-0.00%

Expected Cash-Flows