Legence Corp. (LGN) Stock Analysis
Legence Corp.
▾ What's in the 35/100 risk score? (higher = riskier)
Contributions (weight × component score) sum to the total. This near-term score now includes fundamental health (leverage, FCF trend). It excludes the Altman Z score, whose retained-earnings input this filer does not report separately. See the Financial Health section for the full balance-sheet read.
How to read LGN (pre-profit growth)
This company is reinvesting instead of generating profit, so a standard DCF cannot price it. The useful question is whether the growth the market is paying for is achievable — and whether the company can fund itself until then.
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Reverse-DCF — the growth the price demands ↓
It shows exactly how fast the business must grow to justify today's price. Compare that to what comparable companies have actually achieved.
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Cash runway ↓
Can it reach profitability before it has to raise money and dilute shareholders?
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Interactive calculator ↓
Set your own growth + margin assumptions and see what the business would be worth if you are right.
Standard DCF doesn't fit LGN well — but that's expected for this kind of business. The Rule of 40 (Pre-Profit Growth) Lens below uses the metrics actually used by analysts who value specialty construction. Reverse DCF + Football Field also work as cross-checks.
Quality & solvency checks
Cheap stocks can be cheap for a reason. These screens warn when a low valuation comes paired with structural fragility.
Why it matters: Cheap-looking stocks (low P/E or P/B) often have low Z-scores because the market knows the company is dying. Z-score warns you before you fall into a value trap.
Reference: > 3.0 = safe zone · 1.81–3.0 = grey zone · < 1.81 = distress zone
Full explanation →
The Z-score needs working capital, retained earnings, EBIT, sales and total assets from the latest balance sheet, and at least one of those isn't reported in machine-readable form here — common for foreign private issuers. We leave it blank rather than compute a distress verdict from an estimated input. It doesn't affect the reported figures in the financial tables below.
▾ The checks — what passed, what didn't (and what we couldn't measure)
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✗ Positive net incomeNet income -$59.8M in FY2025.Why this matters: Does the company actually earn a profit? Sustained losses eventually force it to raise money — diluting you — or take on debt.
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✓ Positive operating cash flowOperating cash flow $256.9M (was $29.3M the prior year).
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✓ Cash flow backs up reported profitOperating cash flow $256.9M vs net income -$59.8M.
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✗ Return on assets improvingReturn on assets -2.2% vs -1.2% a year ago.Why this matters: Is the company squeezing more profit out of each dollar of assets than last year? Rising = getting more efficient; falling = the opposite.
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✓ Debt load (vs assets)The filing reports no interest-bearing debt in either year (total assets $2,679.4M).
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✗ Short-term liquidity (current ratio)Current ratio 1.57x vs 1.84x a year ago.Why this matters: The current ratio compares assets it can turn to cash within a year against bills due within a year. Below 1.0 means it may struggle to cover near-term obligations.
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· Share count (dilution) (n/a — data not reported; not scored)
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✓ Pricing power (gross margin)Gross margin 21.0% vs 20.5% a year ago.
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✓ Sales per asset (asset turnover)Asset turnover 0.95x vs 0.89x a year ago.
Missing data is never counted as a pass or a fail — it's shown as n/a and excluded from the denominator. Each check compares the company against its own prior year.
A standard discounted cash flowDCF — Discounted Cash Flow — sums up all future cash a business will produce, adjusted for the fact that future dollars are worth less than dollars today.
Why it matters: It is the most fundamentally honest valuation method when applicable — but only works for companies with predictable, positive cash flow.
Reference: Best for: mature, profitable businesses. Fails for: pre-profit growth, banks, REITs.
Full explanation → valuation is not meaningful for Legence Corp. because its net income is negative, indicating it is not yet generating consistent profits. Investors are likely focused on its strong revenue growth of 25.7%/yr and positive operating cash flow, betting on its ability to scale and achieve profitability. The primary quantifiable risk is the significant stock-based compensation, which equals 31% of pre-SBCSBC (Stock-Based Compensation) — Paying employees with company shares instead of cash.
Why it matters: It's a real cost — it dilutes your ownership — so we subtract it from free cash flow even though accounting rules add it back, which would otherwise flatter cash-heavy tech companies.
Reference: Can be 10–30% of revenue at high-growth software firms.
Full explanation → free cash flowFree Cash Flow (FCF) — Operating cash flow minus capital spending: cash left after a company covers operating costs, taxes and interest and reinvests in the business — but BEFORE repaying debt principal or paying dividends. The cash actually available to investors.
Why it matters: A company can show big profits on paper while burning through cash. FCF is what actually fills the bank account.
Reference: Healthy mature businesses convert 8–15% of revenue into FCF · Growth companies often negative
Full explanation →, diluting shareholder value.
As of 3 months ago
Anatomy of a share
What you're buying per share. Bars are at the same scale so you can see the relative size of revenue, costs, cash flow, and debt — not just read them in a table.
What you actually need to decide
Every stock price is a disagreement. Here's the single thing that must go right for the bulls, the single thing that breaks the thesis, and the concrete signposts to watch so you can update your view as real results arrive.
Why it matters: It's a real cost — it dilutes your ownership — so we subtract it from free cash flow even though accounting rules add it back, which would otherwise flatter cash-heavy tech companies.
Reference: Can be 10–30% of revenue at high-growth software firms.
Full explanation → free cash flowFree Cash Flow (FCF) — Operating cash flow minus capital spending: cash left after a company covers operating costs, taxes and interest and reinvests in the business — but BEFORE repaying debt principal or paying dividends. The cash actually available to investors.
Why it matters: A company can show big profits on paper while burning through cash. FCF is what actually fills the bank account.
Reference: Healthy mature businesses convert 8–15% of revenue into FCF · Growth companies often negative
Full explanation →, could erode shareholder value if profitability is not achieved.
- Improvement in net income profitability
- Continued revenue growth rates above 20%
- Reduction in stock-based compensation as a percentage of free cash flow
The trend, in plain numbers (FY2024 → FY2025, latest reported)
Straight from the financial statements — no model, no opinion. For a small or unprofitable company, the direction of these numbers usually tells you more than any single valuation.
- Revenue grew +22% to $2.55B.
- Free cash flow rose to $151.4M.
- Still unprofitable at -$59.8M — loss widening.
Roughly flat: Gross margin held to 21% (+0 pts).
Management & Leadership
Legence Corp. is led by CEO Adam S. Coffey, who has extensive experience in the building services and infrastructure sectors. The company focuses on integrated energy and building solutions.
What They Make
Legence Corp. provides integrated energy and building solutions, including energy efficiency, decarbonization, and smart building technologies, primarily to commercial and institutional clients.
End Markets
Revenue Drivers
Why Is It Priced Like This?
Why Customers Pay
What we use instead: earnings (P/E, EV/EBIT), book value (P/B) — computed from the figures this company does report, shown in the sections below. Those numbers are unaffected by the missing cash-flow data.
The market is pricing Legence Corp. based on its rapid revenue growth of 25.7%/yr and expanding gross margins from 19.5% to 21%. Despite negative net income, the positive operating cash flow suggests a viable business model, with investors anticipating future profitability and continued expansion in the energy solutions market.
Business Model & Valuation
How They Make Money
The company funds itself through its positive operating cash flow, though stock-based compensation is a significant expense, equaling 31% of pre-SBCSBC (Stock-Based Compensation) — Paying employees with company shares instead of cash.
Why it matters: It's a real cost — it dilutes your ownership — so we subtract it from free cash flow even though accounting rules add it back, which would otherwise flatter cash-heavy tech companies.
Reference: Can be 10–30% of revenue at high-growth software firms.
Full explanation → free cash flowFree Cash Flow (FCF) — Operating cash flow minus capital spending: cash left after a company covers operating costs, taxes and interest and reinvests in the business — but BEFORE repaying debt principal or paying dividends. The cash actually available to investors.
Why it matters: A company can show big profits on paper while burning through cash. FCF is what actually fills the bank account.
Reference: Healthy mature businesses convert 8–15% of revenue into FCF · Growth companies often negative
Full explanation →.
Free Cash Flow DCF
Standard FCF DCF: positive free cash flow in a sector suited for cash-flow-based valuation.
Show advanced inputs
| Revenue Growth | 25.7% |
| Historical Fcf Growth | 372.1% |
| Sector Default | 6.0% |
| Best Estimate | 19.8% |
| Method | blend(70% revenue_cagr, 30% sector) |
| Growth Basis | total |
What this model does NOT do: this is a consolidated owner-earnings FCF model. Standalone segment assumptions: none. It does not project its revenue segments independently; their combined effect is embedded in the historical revenue and cash-flow trend the model extrapolates. The calculator above can only approximate a segment's impact through the single consolidated growth rate — it cannot model any one line separately. For a true segment-level view, build a separate model from the company's segment disclosures.
Maturity & Competitive Position
Moat Signals
Revenue is growing at 25.7%/yr over two years, from $1615M to $2550M.
Geography & Markets
Legence Corp. primarily operates within the United States, providing its integrated energy and building solutions across various regions.
Geographic Risks
Market Signals
These are timing signals, not value signals — they describe the stock's recent price behavior, not what the business is worth. Use them for the "the thesis looks good, but is now the moment?" question. Each tile below explains what it's saying.
Why it matters: Short-term contrarian indicator. Extreme readings often precede mean reversion, though not always.
Reference: 30–70 normal · >70 overbought · <30 oversold
Full explanation → (14)49.9NeutralMomentum is balanced — neither overbought nor oversold.
Why it matters: When the fast line crosses above the slow line, short-term momentum is turning up; below, turning down. A timing cue, not a value signal.
Reference: Line above signal = bullish momentum · below = bearish
Full explanation →BearishLine below signalThe fast trend is below the slow trend — short-term momentum is currently downward.
Technicals describe price, not the business. A great company can have a "bearish" tape (a buying chance) and a weak one a "bullish" tape (a trap). Pair these with the valuation and health sections above.
QUALITY
Data Quality & Risk Flags (6 notes — click to expand/collapse)
Guardrail Notes (6)
- Stock-based compensation equals 31% of pre-SBC free cash flow; FCF used here is net of SBC (a real shareholder-dilution cost), so it is lower than the headline GAAP cash-flow figure.
- Shares from unknown — per-share values may be less accurate.
- Illiquidity discount 25% applied (small/micro-cap — harder to exit, demand a margin).
- Shares/market cap missing or defaulted; per-share valuation unreliable.
- Shares defaulted to 1; IV is NOT meaningful — treat as data-unavailable.
- DATA UNAVAILABLE: per-share values suppressed due to missing/unreliable shares data.
FINANCIALS
Financial Statements (5-year tables — click to expand)
From Legence Corp.'s SEC filings (EDGAR).
Income (5yr)
| Year | Revenue | Net Income | EPS |
|---|---|---|---|
| 2025 | 2.6B | -59.8M | — |
| 2024 | 2.1B | -28.6M | — |
| 2023 | 1.6B | -46.0M | — |
Cash Flow (5yr)
| Year | Operating CF | CapEx | − SBC & adj. | Free Cash Flow |
|---|---|---|---|---|
| 2025 | 256.9M | 37.9M | 67.6M | 151.4M |
| 2024 | 29.3M | 19.0M | 5.4M | 4.8M |
| 2023 | 33.9M | 17.1M | 10.1M | 6.8M |
How we define FCF: operating cash flow − capital expenditure − stock-based compensation (owner-earnings basis — SBC is a real cost to shareholders even though it's non-cash). Latest year: 256.9M − 37.9M − 67.6M (SBC & adj.) = 151.4M. This is the same owner-earnings FCF definition the valuation model uses.
Balance Sheet
| Total Assets | 2.7B |
| Total Liabilities | 1.9B |
| Equity | 392.2M |