LGI Homes (LGIH)

Return on equity (ROE)

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Net income (ttm)	US$ in thousands	199,227	181,253	204,601	274,843	326,567	403,755	413,915	408,673	429,645	454,770	443,224	380,714	323,895	252,337	212,682	203,113	178,608	156,391	144,765	146,318
Total stockholders’ equity	US$ in thousands	1,856,030	1,802,680	1,731,010	1,674,230	1,642,410	1,606,980	1,513,920	1,422,750	1,395,850	1,335,770	1,286,410	1,218,640	1,139,000	1,012,670	918,782	859,605	845,193	777,047	725,235	676,926
ROE		10.73%	10.05%	11.82%	16.42%	19.88%	25.13%	27.34%	28.72%	30.78%	34.05%	34.45%	31.24%	28.44%	24.92%	23.15%	23.63%	21.13%	20.13%	19.96%	21.62%

December 31, 2023 calculation

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

Based on the data provided, the return on equity (ROE) of LGI Homes Inc has shown a declining trend over the past eight quarters. The ROE decreased from 28.72% in Q1 2022 to 10.73% in Q4 2023. This significant decline indicates a decrease in the company's ability to generate profits from shareholders' equity.

The decreasing ROE may be a cause for concern as it suggests a weakening financial performance and efficiency in utilizing the shareholders' investment to generate earnings. This could be attributed to various factors such as increased expenses, declining sales, or inefficient management of assets and liabilities.

It is essential for LGI Homes Inc to analyze the reasons behind the decline in ROE and take appropriate measures to improve its profitability and efficiency. This could involve implementing cost-cutting strategies, improving operational efficiency, or revising its capital structure to enhance shareholder value and overall financial performance.