LGI Homes
LGIH.US Full Coverage
Last updated:
Volume
52W avg
Day Range
52W High
52W Low
Market Cap
Div Yield
Forward P/E
P/B
Headlines
FY2026 Q1
LGI Homes posted an adjusted gross margin of 23.4% in Q1, topping the high end of its prior guidance and prompting management to raise full‑year gross margin guidance to 18.5‑20.5% and adjusted gross margin guidance to 22.0‑24.0%. The margin improvement occurred as the cancellation rate climbed to a record 45.6% (up from 43.3% sequentially) and net orders fell 15% year over year. Meanwhile, the quarter‑end backlog grew 63% YoY to 1,699 homes, the highest level since 2022.
Adjusted Gross Margin
23.4%
↓20 bps
Cancellation Rate
45.6%
↑2,930 bps
Ending Backlog (Homes)
1,699
↑63.4%
Revenue
$319.7M
↓9.0%
Adjusted EBITDA
$24.4M
↑30.0%
What We're Watching
Risk
Cancellation Rate Trajectory
📅
Next 1-2 Quarters
What to Monitor
The quarterly cancellation rate. A stabilization or decline below the current 45.6% level would be a positive signal, while a continued increase would be a major concern.
Why It Matters
At 45.6%, nearly one in two contracts are failing. This high rate creates significant uncertainty in backlog conversion, making revenue forecasts unreliable and signaling extreme fragility in the company's core customer base.
Opportunity
Gross Margin Sustainability
📅
Next Quarter
What to Monitor
Q2 adjusted gross margin performance relative to the Q1 level of 23.4%, which management guided would be "similar." Also, commentary on the drivers (cost relief, mix, pricing power vs. incentives).
Why It Matters
Sustaining margins near the high end of the new 22-24% guidance range would confirm a fundamental improvement in profitability, validating the rebound from Q4 and potentially leading to further upward revisions to earnings estimates.
Operational
Inventory Rebalancing
📅
Ongoing
What to Monitor
Management's commentary on the ratio of completed homes to homes under construction. Progress toward the stated goal of a more balanced 50/50 split from the current "heavier" completed inventory level.
Why It Matters
Achieving a more balanced inventory mix would reduce carrying costs, lower the risk of holding aged inventory that requires future discounting, and improve capital efficiency.
Strategic
Customer Pipeline Conversion Efficiency
📅
Next 1-2 Quarters
What to Monitor
Qualitative commentary on the effectiveness of the extended buyer engagement strategy. Any metrics, even anecdotal, on the conversion of buyers who initially need more time to qualify for financing.
Why It Matters
This strategy is management's primary justification for the high cancellation rate. Evidence that it is successfully expanding the pool of qualified buyers and yielding incremental closings would validate the approach and de-risk the backlog.
Operational
Resilience of Sales Pace
📅
Next Quarter
What to Monitor
The monthly absorption rate and management's qualitative assessment of sales trends, especially in the context of persistent interest rate volatility and affordability challenges.
Why It Matters
Continued sales momentum despite affordability pressures would signal strong underlying demand and effective use of incentives, supporting the company's ability to meet its full-year closings guidance.
