LGI Homes, Inc. (NASDAQ:LGIH) Consensus Forecasts Have Become A Little Darker Since Its Latest Report
It's been a sad week for LGI Homes, Inc. (NASDAQ:LGIH), who've watched their investment drop 13% to US$113 in the week since the company reported its annual result. It looks like the results were a bit of a negative overall. While revenues of US$2.4b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 4.7% to hit US$8.42 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.
Check out our latest analysis for LGI Homes
After the latest results, the six analysts covering LGI Homes are now predicting revenues of US$2.72b in 2024. If met, this would reflect a meaningful 16% improvement in revenue compared to the last 12 months. Per-share earnings are expected to ascend 11% to US$9.38. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.97b and earnings per share (EPS) of US$11.39 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.
It'll come as no surprise then, to learn that the analysts have cut their price target 8.1% to US$115. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic LGI Homes analyst has a price target of US$160 per share, while the most pessimistic values it at US$88.00. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting LGI Homes' growth to accelerate, with the forecast 16% annualised growth to the end of 2024 ranking favourably alongside historical growth of 8.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.9% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that LGI Homes is expected to grow much faster than its 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple LGI Homes analysts - going out to 2025, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for LGI Homes (1 shouldn't be ignored!) that you should be aware of.
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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.
