Analysts Have Lowered Expectations For LGI Homes, Inc. (NASDAQ:LGIH) After Its Latest Results

Shareholders might have noticed that LGI Homes, Inc. (NASDAQ:LGIH) filed its annual result this time last week. The early response was not positive, with shares down 8.5% to US$73.63 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. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for LGI Homes

Following the latest results, LGI Homes' six analysts are now forecasting revenues of US$2.51b in 2025. This would be a meaningful 14% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dip 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.

It'll come as no surprise then, to learn that the analysts have cut their price target 5.6% to US$112. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values LGI Homes at US$140 per share, while the most bearish prices it at US$80.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await LGI Homes shareholders.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. 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 5.5% annually. Not only are LGI Homes' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for LGI Homes. They also downgraded LGI Homes' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on LGI Homes. Long-term earnings power is much more important than next year's profits. We have forecasts for LGI Homes going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for LGI Homes that you need to take into consideration.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.