It’s been a pretty great week for LGI Homes, Inc. (NASDAQ:LGIH) shareholders, with its shares surging 12% to US$48.90 in the week since its latest quarterly results. Revenues were US$438m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$1.05, an impressive 48% ahead of estimates. 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.
Taking into account the latest results, the most recent consensus for LGI Homes from dual analysts is for revenues of US$1.83b in 2027. If met, it would imply a modest 5.9% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to leap 24% to US$3.79. In the lead-up to this report, the analysts had been modelling revenues of US$2.02b and earnings per share (EPS) of US$3.59 in 2027. So it’s pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company’s earnings power.
Check out our latest analysis for LGI Homes
The average price target increased 42% to US$93.00, with the analysts signalling that the improved earnings outlook is more important to the company’s valuation than its revenue.
Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that LGI Homes’ rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 4.7% growth to the end of 2027 on an annualised basis. That is well above its historical decline of 12% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 6.1% per year. So although LGI Homes’ revenue growth is expected to improve, it is still expected to grow slower than the industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards LGI Homes following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2027, which can be seen for 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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