LGI Homes, Inc. (NASDAQ:LGIH) Just Reported And Analysts Have Been Cutting Their Estimates

Yahoo

01-03-2025

Last week, you might have seen that LGI Homes, Inc. (NASDAQ:LGIH) released its yearly result to the market. The early response was not positive, with shares down 5.6% to US$73.43 in the past week. Results were roughly in line with estimates, with revenues of US$2.2b and statutory earnings per share of US$8.30. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for LGI Homes
Taking into account the latest results, the current consensus from LGI Homes' six analysts is for revenues of US$2.51b in 2025. This would reflect a meaningful 14% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to shrink 6.1% to US$7.87 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.74b and earnings per share (EPS) of US$10.19 in 2025. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.
The consensus price target fell 5.6% to US$112, with the weaker earnings outlook clearly leading valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic LGI Homes analyst has a price target of US$140 per share, while the most pessimistic values it at US$80.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the LGI Homes' past performance and to peers in the same industry. One thing stands out from these estimates, which is that LGI Homes is forecast to grow faster in the future than it has in the past, with revenues expected to display 14% annualised growth until the end of 2025. If achieved, this would be a much better result than the 0.2% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 5.6% annually. So it looks like LGI Homes is expected to grow faster than its competitors, at least for a while.
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded LGI Homes' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of LGI Homes' future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for LGI Homes going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 1 warning sign for LGI Homes that we have uncovered.
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