Does The Market Have A Low Tolerance For LGI Homes, Inc.'s (NASDAQ:LGIH) Mixed Fundamentals?

Simply Wall St.12-16

It is hard to get excited after looking at LGI Homes' (NASDAQ:LGIH) recent performance, when its stock has declined 18% over the past three months. We, however decided to study the company's ...

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We, however decided to study the company's ...</p>\n\n<a href=\"https://finance.yahoo.com/news/does-market-low-tolerance-lgi-110012874.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Does The Market Have A Low Tolerance For LGI Homes, Inc.'s (NASDAQ:LGIH) Mixed Fundamentals?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nDoes The Market Have A Low Tolerance For LGI Homes, Inc.'s (NASDAQ:LGIH) Mixed Fundamentals?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-16 19:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/does-market-low-tolerance-lgi-110012874.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>It is hard to get excited after looking at LGI Homes' (NASDAQ:LGIH) recent performance, when its stock has declined 18% over the past three months. We, however decided to study the company's ...</p>\n\n<a href=\"https://finance.yahoo.com/news/does-market-low-tolerance-lgi-110012874.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"USJW.SI","symbol_name":"ALPHAB 3xLongSG261006","start_time":0,"source_url":"https://finance.yahoo.com/news/does-market-low-tolerance-lgi-110012874.html","article_id":"2491645276","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/JTOl0BFk4.SvFXeiXQgFbg--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/7a3247b09aa49d6f85894caffcf9e69e"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2491645276","pubTimestamp":1734346812,"columns":[],"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"It is hard to get excited after looking at LGI Homes'  recent performance, when its stock has declined 18% over the past three months. We, however decided to study the company's financials to determine if they have got anything to do with the price decline. Long-term fundamentals are usually what drive market outcomes, so it's worth paying close attention. Specifically, we decided to study LGI Homes'  ROE in this article.Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. In simpler terms, it measures the profitability of a company in relation to shareholder's equity.","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"USJW.SI":"ALPHAB 3xLongSG261006","IE00B3QW5Z07.USD":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (USD) ACC","BK4585":"ETF&股票定投概念","IE00BGHQF748.EUR":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (EUR) ACC","PSQ":"纳指反向ETF","QLD":"纳指两倍做多ETF","NDAQ":"纳斯达克OMX交易所","BK4588":"碎股","TSYW.SI":"TESLA 3xLongSG261006","SQQQ":"纳指三倍做空ETF","USAW.SI":"AMZN 3xLongSG261006","LGI":"LGI全球基金","LGIH":"LGI Homes Inc","BK4088":"住宅建筑","LU2095319765.USD":"Natixis Thematics Subscription Economy R/A USD","NVIW.SI":"NVDA 3xLongSG261006","BK4112":"金融交易所和数据","LU2210150020.SGD":"Natixis Thematics Subscription Economy R/A SGD","QID":"纳指两倍做空ETF","LU2210149790.SGD":"Natixis Thematics Subscription Economy R/A SGD-H","TQQQ":"纳指三倍做多ETF","IE00BKPKM429.USD":"NEUBERGER BERMAN GLOBAL SUSTAINABLE EQUITY \"A\" (USD) ACC",".IXIC":"NASDAQ Composite","IE00B64PRP62.GBP":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (GBP) ACC"},"translate_title":"市场对LGI Homes，Inc.（纳斯达克：LGIH）混合基本面的容忍度是否较低？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"NDAQ":1,"LGI":1,"LGIH":1,".IXIC":1,"USJW.SI":0.6,"USAW.SI":0.6,"TSYW.SI":0.6,"TQQQ":0.6,"SQQQ":0.6,"QLD":0.6,"QID":0.6,"PSQ":0.6,"NVIW.SI":0.6,"NQmain":0.6,"MNQmain":0.6},"content_text":"It is hard to get excited after looking at LGI Homes' (NASDAQ:LGIH) recent performance, when its stock has declined 18% over the past three months. We, however decided to study the company's financials to determine if they have got anything to do with the price decline. Long-term fundamentals are usually what drive market outcomes, so it's worth paying close attention. Specifically, we decided to study LGI Homes'  ROE in this article. \n Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. In simpler terms, it measures the profitability of a company in relation to shareholder's equity. \n Check out our latest analysis for LGI Homes \n How Do You Calculate Return On Equity? \n Return on equity can be calculated by using the formula: \n Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity \nSo, based on the above formula, the ROE for LGI Homes is:\n9.9% = US$197m ÷ US$2.0b (Based on the trailing twelve months to September 2024).\n The 'return' is the profit over the last twelve months. That means that for every $1 worth of shareholders' equity, the company generated $0.10 in profit. \n Why Is ROE Important For Earnings Growth? \n So far, we've learned that ROE is a measure of a company's profitability. Based on how much of its profits the company chooses to reinvest or \"retain\", we are then able to evaluate a company's future ability to generate profits. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features. \n LGI Homes' Earnings Growth And 9.9% ROE \n At first glance, LGI Homes' ROE doesn't look very promising. Next, when compared to the average industry ROE of 16%, the company's ROE leaves us feeling even less enthusiastic. For this reason, LGI Homes' five year net income decline of 2.8% is not surprising given its lower ROE. We reckon that there could also be other factors at play here. For example, it is possible that the business has allocated capital poorly or that the company has a very high payout ratio. \n That being said, we compared LGI Homes' performance with the industry and were concerned when we found that while the company has shrunk its earnings, the industry has grown its earnings at a rate of 19% in the same 5-year period. \n\n\n\n  NasdaqGS:LGIH Past Earnings Growth December 16th 2024\n \n\n Earnings growth is an important metric to consider when valuing a stock. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if LGI Homes is trading on a high P/E or a low P/E, relative to its industry. \n Is LGI Homes Efficiently Re-investing Its Profits? \n Because LGI Homes doesn't pay any regular dividends, we infer that it is retaining all of its profits, which is rather perplexing when you consider the fact that there is no earnings growth to show for it. So there might be other factors at play here which could potentially be hampering growth. For example, the business has faced some headwinds. \n Conclusion \n In total, we're a bit ambivalent about LGI Homes' performance. While the company does have a high rate of reinvestment, the low ROE means that all that reinvestment is not reaping any benefit to its investors, and moreover, its having a negative impact on the earnings growth. That being so, the latest industry analyst forecasts show that the analysts are expecting to see a huge improvement in the company's earnings growth rate. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2491645276"}