LGI Homes (LGIH)
Return on total capital
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 261,754 | 418,116 | 542,775 | 367,849 | 231,832 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 1,856,030 | 1,642,410 | 1,395,850 | 1,139,000 | 845,193 |
| Return on total capital | 14.10% | 25.46% | 38.88% | 32.30% | 27.43% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $261,754K ÷ ($—K + $1,856,030K)
= 14.10%
LGI Homes Inc's return on total capital has experienced fluctuations over the past five years, as indicated by the data provided. The return on total capital for the company was 7.27% in 2023, a decrease from the previous year's 13.45%. This decline suggests a decrease in the company's efficiency in generating profits from its total capital investment.
Comparing the return on total capital in 2023 to earlier years, we see a downward trend since the peak of 24.88% in 2021. This indicates a potential decline in the company's profitability relative to its total capital employed over the years. However, it is important to note that the return on total capital in 2023 is still higher than that in 2019, suggesting some level of improvement over the longer term.
Further analysis would be needed to understand the factors contributing to the fluctuations in LGI Homes Inc's return on total capital and to assess the company's overall financial performance and efficiency in utilizing its capital resources.
Peer comparison
Dec 31, 2023