LGI Homes, Inc. Just Missed Earnings - But Analysts Have Updated Their Models

Shareholders of LGI Homes, Inc. (NASDAQ:LGIH) will be pleased this week, given that the stock price is up 13% to US$46.17 following its latest quarterly results. It looks like the results were a bit of a negative overall. While revenues of US$397m were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 9.0% to hit US$0.85 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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Taking into account the latest results, the consensus forecast from LGI Homes' five analysts is for revenues of US$2.00b in 2026. This reflects a meaningful 12% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to reduce 2.2% to US$4.50 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.97b and earnings per share (EPS) of US$4.75 in 2026. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

See our latest analysis for LGI Homes

It might be a surprise to learn that the consensus price target was broadly unchanged at US$76.17, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values LGI Homes at US$95.00 per share, while the most bearish prices it at US$48.50. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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 9.3% annualised growth until the end of 2026. If achieved, this would be a much better result than the 6.2% 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 3.9% 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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for LGI Homes going out to 2027, and you can see them free on our platform here..

Plus, you should also learn about the 2 warning signs we've spotted with LGI Homes (including 1 which is potentially serious) .

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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.