LGI Homes (LGIH)

Return on total capital

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
Earnings before interest and tax (EBIT) (ttm) US$ in thousands 261,754 240,059 259,311 350,914 418,116 514,647 532,940 519,049 542,775 565,939 516,760 436,236 367,849 286,172 273,089 265,027 231,832 203,170 187,429 189,565
Long-term debt US$ in thousands — — — — — — — — — — — — — — — — — — — —
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
Return on total capital 14.10% 13.32% 14.98% 20.96% 25.46% 32.03% 35.20% 36.48% 38.88% 42.37% 40.17% 35.80% 32.30% 28.26% 29.72% 30.83% 27.43% 26.15% 25.84% 28.00%

December 31, 2023 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $261,754K ÷ ($—K + $1,856,030K)
= 14.10%

LGI Homes Inc's return on total capital has shown a declining trend over the past eight quarters. In Q4 2023, the return on total capital was at 7.27%, down from 6.88% in Q3 2023. This downward trend continued from the peak of 21.47% in Q1 2022. The decreasing trend in return on total capital may indicate inefficiencies in the utilization of capital and lower profitability relative to the invested capital. It is essential for the company to closely monitor and address the factors contributing to this decline to improve overall financial performance and sustainable growth in the long term.