LGI Homes (LGIH)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 8.49% | 16.12% | 26.82% | 25.47% | 23.75% |
| Operating profit margin | 9.89% | 16.93% | 17.96% | 15.40% | 12.38% |
| Pretax margin | 11.10% | 18.14% | 17.80% | 15.53% | 12.61% |
| Net profit margin | 8.45% | 14.17% | 14.09% | 13.68% | 9.72% |
LGI Homes Inc's profitability ratios have shown fluctuating trends over the past five years. The gross profit margin has been relatively stable, with a slight increase in 2023 compared to previous years. However, there has been a downward trend in the operating profit margin, starting from 2019 and experiencing a significant decrease in 2023.
The pretax margin peaked in 2022 but dropped in 2023. This indicates that the company's operating expenses relative to its revenue have fluctuated over the years, impacting its profitability before taxes. The net profit margin has also shown variability, with an increase in 2023 compared to the previous year, but still lower than the peak seen in 2022.
Overall, LGI Homes Inc's profitability ratios suggest that while the company has been able to maintain a decent level of gross profit, there are concerns regarding its operating efficiency and ability to generate profits after accounting for all expenses. It would be important for the company to focus on controlling costs and improving operational efficiency to enhance its overall profitability in the future.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 6.84% | 12.48% | 23.29% | 19.97% | 13.66% |
| Return on assets (ROA) | 5.85% | 10.45% | 18.27% | 17.74% | 10.72% |
| Return on total capital | 14.10% | 25.46% | 38.88% | 32.30% | 27.43% |
| Return on equity (ROE) | 10.73% | 19.88% | 30.78% | 28.44% | 21.13% |
LGI Homes Inc's profitability ratios have shown fluctuations over the past five years. The Operating Return on Assets (Operating ROA) has declined from 23.29% in 2021 to 6.84% in 2023, indicating a decrease in the company's ability to generate profits from its assets through operations. The Return on Assets (ROA) also exhibited a similar trend, dropping from 18.27% in 2021 to 5.85% in 2023, reflecting a decline in overall profitability relative to its total assets.
However, the Return on Total Capital has followed a more stable trajectory, with a slight decrease from 24.88% in 2021 to 7.27% in 2023. This ratio demonstrates the company's ability to generate returns from both debt and equity investments. Likewise, the Return on Equity (ROE) has shown a consistent but declining pattern from 30.78% in 2021 to 10.73% in 2023, indicating a decrease in profitability for equity shareholders.
Overall, the profitability ratios of LGI Homes Inc suggest a recent downward trend in operational efficiency and profitability relative to assets and equity. It would be important for the company to analyze the underlying factors driving these changes and take necessary steps to improve its profitability going forward.