LGI Homes (LGIH)

Return on equity (ROE)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income	US$ in thousands	199,227	326,567	429,645	323,895	178,608
Total stockholders’ equity	US$ in thousands	1,856,030	1,642,410	1,395,850	1,139,000	845,193
ROE		10.73%	19.88%	30.78%	28.44%	21.13%

December 31, 2023 calculation

ROE = Net income ÷ Total stockholders’ equity
= $199,227K ÷ $1,856,030K
= 10.73%

The Return on Equity (ROE) of LGI Homes Inc has shown a fluctuating trend over the past five years. In 2023, the ROE stands at 10.73%, a decrease from the previous year's 19.88%. This decline indicates a lower profitability relative to shareholders' equity. However, when comparing the current ROE to the ROE of 2021 and 2020, it remains lower but relatively consistent.

In 2021, LGI Homes Inc achieved an ROE of 30.78%, reflecting a high profitability level compared to the other years in the table. The ROE slightly decreased in 2022 to 19.88%, but it remained relatively strong before experiencing a more significant drop in 2023. It is worth noting that the ROE in 2020 was also relatively high at 28.44%, indicating a consistent trend of good performance in generating profits relative to shareholders' equity.

Overall, LGI Homes Inc has demonstrated a history of strong ROE, with fluctuations in recent years. The company's ability to effectively utilize shareholders' equity to generate profits has been evident, although the recent decrease in ROE warrants further analysis to determine the factors contributing to this decline.