Is LGI Homes, Inc. overvalued or undervalued?

As of 7 July 2025, the valuation grade for LGI Homes, Inc. has moved from expensive to very expensive, indicating a significant deterioration in its valuation outlook. The company is currently overvalued, as evidenced by a P/E ratio of 7, which is notably lower than peers like Toll Brothers, Inc. with a P/E of 11.10 and Taylor Morrison Home Corp. at 10.67. Additionally, LGI Homes has an EV to EBITDA ratio of 14.45, which is higher than the industry average, further supporting the overvaluation assessment.
In comparison to its peers, LGI Homes, Inc. shows a stark contrast with Meritage Homes Corp., which is also rated very expensive but has a more favorable P/E of 9.16. The company's recent performance has been poor, with a year-to-date return of -35.41%, significantly underperforming the S&P 500's return of 12.22% over the same period. This trend reinforces the notion that LGI Homes is not only overvalued but also struggling in the current market environment.