JPMorgan Revises LGI Homes Estimate Following June Sales Decline

Author: Olivia Taylor Updated: 07-09-2025 12:28 PM

Overview of LGI Homes Performance

JPMorgan analyst Michael Rehaut has maintained a bearish stance on LGI Homes, Inc. (NASDAQ: LGIH), assigning it an Underweight rating. This decision comes alongside a reduction in the price forecast, now set at $47, down from the previous estimate of $52.

June Home Closings Decline

Recently, LGI Homes disclosed that it closed 457 homes in June, a significant dip from 571 homes closed in June of the previous year. As of the end of that month, LGI Homes has 146 active selling communities, indicating a need for strategic adjustments.

Earnings Estimates Revised

Following a disappointing second quarter, which fell short of expectations with only 1,323 closings, Rehaut made substantial reductions to the earnings per share (EPS) estimates. The new projections for the second quarter and for the full years 2025 and 2026 are $1.32, $5.64, and $7.20, compared to the earlier estimates of $1.58, $6.37, and $7.96, respectively.

Valuation Concerns

Rehaut's continued skepticism about LGI Homes' stock valuation is based on its current trading multiples. The stock is trading at around 9.3x and 7.3x the estimated EPS for 2025 and 2026. This contrasts unfavorably with smaller-cap peers, which average about 8.5x and 7.7x respectively.

Market Performance and Expectations

The company's price-to-book ratio is another area of concern, sitting at 0.6x compared to an industry average of 0.95x. This positioning suggests that LGI Homes may struggle with margins and exhibit some of the lowest return on equity (ROE) rates in the sector through 2026.

Future Expectations

Rehaut's assessment includes a price target based on a 6.5x multiple of the 2026 estimated EPS. Additionally, LGI Homes plans to release its financial results for the quarter ending June 30, 2025, which may have a notable impact on market sentiment.

Current Market Movement

Currently, LGI Homes shares have risen by 2.26%, trading at $53.90. Despite positive moves in the immediate term, the longer-term outlook reflects growing uncertainty, bolstered by a notable decline in LGI Homes' stock over the past year, which has dropped over 36%.

Conclusion

Investors and analysts alike are keeping a close watch on LGI Homes as it navigates through this challenging market environment. The ongoing adjustments and the upcoming financial results will be critical in shaping the company's trajectory moving forward.

Frequently Asked Questions

What was the recent rating given to LGI Homes by JPMorgan?

JPMorgan maintained an Underweight rating for LGI Homes due to disappointing quarterly performance.

How many homes did LGI Homes close in June?

LGI Homes reported closing 457 homes in June, a decrease from the previous year's 571.

What are the updated EPS estimates for LGI Homes?

The updated EPS estimates are $1.32 for the second quarter, $5.64 for the full year 2025, and $7.20 for 2026.

What is the current stock price of LGI Homes?

LGI Homes shares are currently trading at $53.90 after experiencing a 2.26% increase.

What is the forecasted price target for LGI Homes' stock?

The price target has been revised to $47, reflecting a 6.5x multiple of the estimated EPS for 2026.

About The Author

Olivia Taylor here, a 26-year-old writer and financial advisor. After earning a degree in finance, I worked in the sector for years. I've always loved numbers and had a talent for simplifying difficult financial ideas so that anyone could understand. I wrote my first book because of this passion; it helps readers take charge of their financial futures by fusing real-life stories with useful financial advice.

Whether they are just beginning their careers, preparing for significant life events, or seeking to invest wisely, my goal with my writing is to enable people to make educated financial decisions. The foundation of my work is the conviction that security and freedom of the individual are largely determined by financial literacy. To further financial education, I run workshops and frequently write for financial blogs in addition to my books.

I like to travel, experience other cultures, and find inspiration in daily life when I'm not writing or examining market trends. My passion is utilizing sound financial practices to help people reach their financial objectives and lead the best lives possible.

Contact Olivia Taylor privately here. Or send an email with ATTN: Olivia Taylor as the subject to contact@investorshangout.com.

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