High insider ownership in LGI Homes may suggest the company operates in all shareholders' interest. However, recent insider selling and lack of buying in the past year calls for caution.
The diminishing returns on increasing capital at LGI Homes is worrying. Current trends suggest poor long-term performance, advising to seek other investment opportunities unless reversed.
The market appears to hold LGI Homes in higher regard given its five-year track record of earnings growth. However, the company's total shareholder return (TSR) of 16% over the last twelve months falls short of the market return.
Despite LGI Homes' solid earnings growth, its ROE lags behind the industry average of 16%, raising doubts about reinvestment efficacy. Additionally, its net income growth trails the industry average of 29%, possibly impacting its valuation and future prospects.
Despite a bullish market triggering a 189% surge in LGI Homes' stock price, the company's diminishing returns on capital suggest underlying risk. Caution is advised for now.
The slower EPS growth compared to share price growth indicates a higher market opinion of the company than five years ago. The general outlook suggests a continuation of the positive long-term trend, despite slower share price gains.
LGI Homes Stock Forum
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