The latest analyst coverage could presage a bad day for LGI Homes, Inc. (NASDAQ:LGIH), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the six analysts covering LGI Homes are now predicting revenues of US$2.8b in 2025. If met, this would reflect a substantial 25% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 28% to US$10.74. Previously, the analysts had been modelling revenues of US$3.1b and earnings per share (EPS) of US$11.79 in 2025. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a small dip in EPS estimates to boot.

View our latest analysis for LGI Homes

Analysts made no major changes to their price target of US$118, suggesting the downgrades are not expected to have a long-term impact on LGI Homes' valuation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting LGI Homes' growth to accelerate, with the forecast 19% annualised growth to the end of 2025 ranking favourably alongside historical growth of 2.0% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.8% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that LGI Homes is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on LGI Homes after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for LGI Homes going out to 2026, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies backed by insiders.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.