LGIH

AI Memo

LGI Homes

As of 2026-05-20/Confidence medium

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Data freshness

AI Memo

As of 2026-05-20 • Model: RankAlpha Sentiment Codex

Decision Panel

Action, confidence, horizon, and decision blockers at a glance.

Action

—

Confidence

medium

Horizon

—

Key catalyst

Backlog conversion into near-term closings • 2026-08-15

Expected move: +9%

Biggest risk

Revenue and net orders were still down, cancellation rates were elevated, and affordability remains pressured by mortgage rates and financing friction. If that backdrop persists, backlog conversion could slow and incentives could pressure margins again.

Invalidation

Break below $31 or thesis failure.

What would change my mind?

The quarter showed better-than-expected margin execution, a sharply larger backlog, and a raised gross-margin outlook, which supports a constructive re-rating if spring demand and pricing discipline hold.

Research note

Recommendation

—

Confidence

medium

As of

2026-05-20

Base target

$52

p=55%

Bull target

$66

p=20%

Bear target

$31

p=25%

Key bullets

Fast scan of bull, bear, and watch items

BullKey bullets

Q1 margin beat and guide raise
Community and lot footprint can support a recovery
The quarter showed better-than-expected margin execution, a sharply larger backlog, and a raised gross-margin outlook, which supports a constructive re-rating if spring demand and pricing discipline hold.

BearKey bullets

Backlog conversion depends on construction timing, buyer financing, and incentive levels; a tougher rate backdrop could delay revenue recognition or force more discounts.
Cancellation rates stayed very high at 45.6%, and net orders fell 15.0% year over year, which signals ongoing affordability and financing pressure.
Net debt to capital was 44.0% at March 31, 2026, leaving less room for a prolonged demand slowdown or a sharp margin reset.

WatchKey bullets

Backlog conversion into near-term closings

Summary

High-level snapshot

Recommendation

Model confidence

medium

Timeframe

Asset

Equity

Trigger

Base case: $52 (p=55%)

Bull/Bear spread: +38% / -35%

Vs latest close: Bull +38% · Base +9% · Bear -35%

Scenario probabilities

Bull Target: $66 (p=20%)Base Target: $52 (p=55%)Bear Target: $31 (p=25%)

Commentary

Primary-source tone is constructive because management raised full-year margin guidance and said a meaningful share of backlog is expected to close in the near term, but the demand backdrop is still challenged by a 45.6% cancellation rate and a 15% decline in net orders. Coverage is thin, no usable post-print analyst revision set is available in the packet, and social context is absent, so conviction stays moderate rather than high. The stock anchored at $41.24 on 2026-05-18, which suggests the April 28 release did not produce a large sustained rerating.

As of 2026-05-20 • Updated bi-weekly / post-earningsSource: Internal modelMethodology

Analyst Summary

Thesis highlights from the latest analysis

Bull Case

Bear Case

Drivers

Scannable catalysts and supporting factors

Q1 margin beat and guide raise
Community and lot footprint can support a recovery

Scenarios

Bull Target (Scenario probability)

$66 / p=20% prob

Base Target (Scenario probability)

$52 / p=55% prob

Bear Target (Scenario probability)

$31 / p=25% prob

Price $48 as of 2026-05-29

Nearest Scenario: Base (∆ 9%)

Targets vs latest close: Bull +38% · Base +9% · Bear -35%

Sentiment & Exposure

News Sentiment (30d)

0.58

Social Sentiment (7d)

0.00

Events

Other notable items detected

EVENT2026-08-15
Backlog conversion into near-term closings
Ending backlog rose to 1,699 homes worth $660.5 million at March 31, 2026, up 63.4% year over year, and management said a significant portion is further along in construction and expected to close in the near term. The key watch item is whether that backlog converts into revenue without forcing deeper incentives or running into financing friction. [#10-Q-2026-04-28]
Prob 55.00% • Move 9.00% • Priced-in 45.00%

Short-term Catalysts

Next few weeks

Q1 margin beat and guide raise
2026-06-15
LGI Homes reported Q1 2026 home sales revenue of $319.7 million, adjusted gross margin of 23.4%, and adjusted diluted EPS of $0.24, then raised full-year gross margin guidance to 18.5%-20.5% and adjusted gross margin guidance to 22.0%-24.0%. That is the clearest near-term rerating hook if spring demand holds and the market continues to reward the margin reset. [#8-K-2026-04-28]
Prob 60% • Move 10% • Priced-in 60%

Long-term Catalysts

Months to a year

Community and lot footprint can support a recovery
2027-02-15
At March 31, 2026, LGI had 142 active communities and 59,028 owned or controlled lots, while the company again emphasized its self-developed land pipeline and disciplined land approvals. If affordability stabilizes, that operating footprint can provide multi-quarter operating leverage. [#10-Q-2026-04-28] [#10-K-2026-02-20]
Prob 45% • Move 15% • Priced-in 35%

Risks

Backlog conversion depends on construction timing, buyer financing, and incentive levels; a tougher rate backdrop could delay revenue recognition or force more discounts.
Cancellation rates stayed very high at 45.6%, and net orders fell 15.0% year over year, which signals ongoing affordability and financing pressure.
Net debt to capital was 44.0% at March 31, 2026, leaving less room for a prolonged demand slowdown or a sharp margin reset.
The company raised margin guidance, but full-year results still depend on input costs, labor availability, land development costs, and trade-policy/tariff effects.

Peers

Symbol	Summary
DFH	Dream Finders Homes is the clearest operating peer in the provided set because it is also a homebuilder. It is the best read-through for backlog conversion, community growth, and margin discipline; the rest of the candidate set is mostly loose sector-cap matching rather than a true operating comp.

Sources

Internal and external references used in this analysis

Model source: RankAlpha Sentiment Codex
Analysis date: 2026-05-20

AI Stock Memo: LGIH - LGI Homes - RankAlpha