Fact based stock research
LGI Homes (NasdaqGS:LGIH)
US50187T1060
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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
LGI Homes stock research in summary
ANALYSIS: With an Obermatt Combined Rank of 22 (worse than 78% compared with investment alternatives), LGI Homes (Homebuilding, USA) shares have lower financial characteristics compared with similar stocks. Shares of LGI Homes are low in value (priced high) with a consolidated Value Rank of 41 (worse than 59% of alternatives), show below-average growth (Growth Rank of 20), and are riskily financed (Safety Rank of 49), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 22, is a sell recommendation based on LGI Homes's financial characteristics. As the company LGI Homes's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 41), low growth (Obermatt Growth Rank of 20), and risky financing practices (Obermatt Safety Rank of 49), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to a small fraction of a safe portfolio. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more
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360° Viewnew| Country | USA |
| Industry | Homebuilding |
| Index | NASDAQ |
| Size class | Large |
26-Dec-2024. Stock data may be delayed. Log in or sign up to get the most recent research.
Analysts rarely agree on a stock’s future. So, who do you believe? Obermatt translates those collective views into a single Sentiment Rank. That plus the financial ranks give you the ultimate 360° View. Sign up to access them.
It’s easier said than done. When your stock drops, it’s easy to want to sell it and find a better performer. Think twice, or even three times, before trading. Those fees (especially the hidden ones) can eat up your gains.
Review the performance ranks of the individual metrics that form each investment strategy.
Research History: LGI Homes
| RESEARCH HISTORY | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 48 |
|
33 |
|
21 |
|
41 |
|
| GROWTH | ||||||||
| GROWTH | 96 |
|
13 |
|
91 |
|
20 |
|
| SAFETY | ||||||||
| SAFETY | 54 |
|
49 |
|
49 |
|
49 |
|
| SENTIMENT | ||||||||
| SENTIMENT | n/a |
|
28 |
|
11 |
|
new |
|
| 360° VIEW | ||||||||
| 360° VIEW | n/a |
|
11 |
|
27 |
|
new |
|
Combined financial peformance in Detail
ANALYSIS: With an Obermatt Combined Rank of 22 (worse than 78% compared with investment alternatives), LGI Homes (Homebuilding, USA) shares have lower financial characteristics compared with similar stocks. Shares of LGI Homes are low in value (priced high) with a consolidated Value Rank of 41 (worse than 59% of alternatives), show below-average growth (Growth Rank of 20), and are riskily financed (Safety Rank of 49), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 22, is a sell recommendation based on LGI Homes's financial characteristics. As the company LGI Homes's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 41), low growth (Obermatt Growth Rank of 20), and risky financing practices (Obermatt Safety Rank of 49), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to a small fraction of a safe portfolio. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more
| RESEARCH HISTORY | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 48 |
|
33 |
|
21 |
|
41 |
|
| GROWTH | ||||||||
| GROWTH | 96 |
|
13 |
|
91 |
|
20 |
|
| SAFETY | ||||||||
| SAFETY | 54 |
|
49 |
|
49 |
|
49 |
|
| COMBINED | ||||||||
| COMBINED | 83 |
|
22 |
|
22 |
|
22 |
|
Value Metrics in Detail
ANALYSIS: With an Obermatt Value Rank of 41 (worse than 59% compared with alternatives), LGI Homes shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for LGI Homes. Price-to-Sales (P/S) is 62, which means that the stock price compared with what market professionals expect for future sales is lower than for 62% of comparable companies, indicating a good value regarding LGI Homes's revenue size. The same is valid for expected Price to Profits (or Price / Earnings, P/E), more favorable than for 65% of alternatives, and it's also true for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 77. But, compared with other companies in the same industry, dividend yields are expected to be lower than average; only 1% of all competitors have even lower dividend yields than LGI Homes (a Dividend Yield Rank of 1). 99% alternative investments in the same business provide a higher dividend yield. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 41, is a hold recommendation based on LGI Homes's stock price compared with the company's operational size and dividend yields. The below-average dividend yield may be a good sign, as it could mean the company has more attractive investment opportunities for the generated cash than to pay it out as dividends. A low dividend yield can also indicate a growth phase. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision. ...read more
| VALUE METRICS | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| PRICE VS. REVENUES (P/S) | ||||||||
| PRICE VS. REVENUES (P/S) | 63 |
|
42 |
|
41 |
|
62 |
|
| PRICE VS. PROFITS (P/E) | ||||||||
| PRICE VS. PROFITS (P/E) | 92 |
|
56 |
|
50 |
|
65 |
|
| PRICE VS. CAPITAL (Market-to-Book) | ||||||||
| PRICE VS. CAPITAL (Market-to-Book) | 31 |
|
54 |
|
47 |
|
77 |
|
| DIVIDEND YIELD | ||||||||
| DIVIDEND YIELD | 1 |
|
1 |
|
1 |
|
1 |
|
| CONSOLIDATED RANK: VALUE | ||||||||
| CONSOLIDATED RANK: VALUE | 48 |
|
33 |
|
21 |
|
41 |
|
Growth Metrics in Detail
ANALYSIS: With an Obermatt Growth Rank of 20 (better than 20% compared with alternatives), LGI Homes shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below-average for LGI Homes. While Sales Growth ranks at 100, professionals currently expect the company to grow more than 100% of its competitors, while all other growth ranks are below the market median. Profit Growth has a rank of 39, which means that, currently, professionals expect the company to grow its profits less than 61% of its competitors, and Capital Growth has a low rank of 1. Historic stock returns were also below average with a current Stock Returns rank of 19 which means that the stock returns have recently been below 81% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 20, is a sell recommendation for growth and momentum investors. If revenues are expected to increase, but all other growth indicators are negative, the company may be investing in future growth through means not visible in the balance sheet and thus not reflected in capital growth. The fact that Stock Returns have been below market doesn't mean that much, as it may be due to overly optimistic investor behavior in the past, which has been corrected to a more reasonable level recently. If that were the case, a positive Value Rank would be a reason to invest because the company is still expected to grow, while stock prices are now at a more reasonable level. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance isn't stellar here. ...read more
| GROWTH METRICS | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 85 |
|
6 |
|
100 |
|
100 |
|
| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 68 |
|
38 |
|
32 |
|
39 |
|
| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | n/a |
|
4 |
|
94 |
|
1 |
|
| STOCK RETURNS | ||||||||
| STOCK RETURNS | 78 |
|
73 |
|
49 |
|
19 |
|
| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 96 |
|
13 |
|
91 |
|
20 |
|
Safety Metrics in Detail
ANALYSIS: With an Obermatt Safety Rank of 49 (better than 49% compared with alternatives), the company LGI Homes has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of LGI Homes is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for LGI Homes and the other two below average. Refinancing is at 94, meaning the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 94% of its competitors. But Leverage is high with a rank of 30, meaning the company has an above-average debt-to-equity ratio. It has more debt than 70% of its competitors. Liquidity is also on the riskier side with a rank of 7, meaning the company generates less profit to service its debt than 93% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 49 (worse than 51% compared with alternatives), LGI Homes has a financing structure that is riskier than that of its competitors. A good Refinancing Rank means that the problems of the company may not be around the corner. But high Leverage is only good if things go well, and low Liquidity is a signal for caution. The financing signals for LGI Homes are on the riskier side, requiring the company's future to be on the safer side. Investors may want to look at Growth and Sentiment ranks before making an investment decision. In the long-term, investors may have a debt challenge with LGI Homes and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more
| SAFETY METRICS | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 22 |
|
56 |
|
21 |
|
30 |
|
| REFINANCING | ||||||||
| REFINANCING | 86 |
|
94 |
|
94 |
|
94 |
|
| LIQUIDITY | ||||||||
| LIQUIDITY | 46 |
|
72 |
|
7 |
|
7 |
|
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 54 |
|
49 |
|
49 |
|
49 |
|
Sentiment Metrics in Detail
| SENTIMENT | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| ANALYST OPINIONS | ||||||||
| ANALYST OPINIONS | n/a |
|
9 |
|
20 |
|
new |
|
| OPINIONS CHANGE | ||||||||
| OPINIONS CHANGE | n/a |
|
26 |
|
25 |
|
new |
|
| PRO HOLDINGS | ||||||||
| PRO HOLDINGS | n/a |
|
36 |
|
29 |
|
new |
|
| MARKET PULSE | ||||||||
| MARKET PULSE | n/a |
|
82 |
|
44 |
|
new |
|
| CONSOLIDATED RANK: SENTIMENT | ||||||||
| CONSOLIDATED RANK: SENTIMENT | n/a |
|
28 |
|
11 |
|
new |
|
Free stock analysis by the purely fact based Obermatt Method for LGI Homes from December 26, 2024.
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