Lennar (LEN) stock: near-term challenges, but still much upside

6:38 pm ET, 02 Oct 2018

Lennar Corporation (LEN) shares are trading at $46.78. The company is announcing its quarterly earnings results on Wednesday before the market opens. What's driving LEN stock price? What's LEN stock price forecast?

Lennar Corporation is a homebuilder focused on the development of residential land and real estate. The stock now trades at a forward P/E ratio of 7.59, which is relatively low compares to its peers.  Homebuilder stocks including Lennar dropped after the announcement of Hurricane Florence.

Investors are showing interest in the company because of its low valuation and improving U.S. housing market. On the other hand, certain investors are worried about the rising interest rates. The company's last quarter’s revenue rose 67% to $5.5 billion, which combined Calatlantic results. The two companies completed the merger at the beginning of the year making the combined entity the largest homebuilder in the U.S.

Third-quarter results will be released before market open on October 03, 2018.  Analysts expect the company to earn $1.21 per share on revenue of $5.65 billion. The company beat analysts’ estimates in the previous four quarters.

What is the sentiment towards the LEN stock? Our technical analysis shows that:

  • The stock short-term sentiment (next 30 days) is negative;
  • The mid-term sentiment (3-6 months) is trending negative;
  • The long-term sentiment (9-12 months) is trending positive. 

Over the last month, Lennar Corporation (LEN) returned -5.88%.

Lennar Corporation (LEN) forward P/E ratio is 7.59, and it's low compared to its industry peers' P/E ratios.

Lennar Corporation (LEN) short share of float is 5.05%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock.

Lennar Corporation (LEN) average analyst price target ($70.06) is 39.76% above its current price ($50.13).

For the latest price and information on Lennar Corporation, please visit Finstead and search for "LEN price" or "LEN news".

Lennar Corporation (LEN) Stock Guide

Updated at: 3:56 am ET, 18 Sep 2020

Before we start: if you're looking for LEN stock price, you can quickly find it out by visiting Finny and typing "LEN quote". If you're looking for a quick scoop on LEN stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "LEN". You'll get all this info in one place. Or you can just type "LEN news" to get the latest stock news.

Looking to buy or sell Lennar Corporation (LEN)? Interested in getting the full scoop on LEN, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this LEN stock guide, we'll address key questions about LEN, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are LEN earnings?
2. What is LEN dividend?
3. What is LEN dividend yield?
4. What is LEN stock forecast (i.e., prediction)?
5. LEN buy or sell? What is LEN Finny Score?
6. What are the reasons to buy LEN? Why should I buy LEN stock?
7. What are the reasons to sell LEN? Why should I sell LEN stock?
8. What are LEN key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are LEN earnings?

LEN trailing 12-month earnings per share (EPS) is $6.64.

2. What is LEN dividend?

LEN forward dividend is $0.50.

3. What is LEN dividend yield?

LEN forward dividend yield is 0.67%.

Analyst Predictions

4. What is LEN stock forecast (i.e., prediction)?

Based on LEN analyst price targets, LEN stock forecast is $77.07 (for a year from now). That means the average analyst price target for LEN stock is $77.07. The prediction is based on 22 analyst estimates.

The low price target for LEN is $62.00, while the high price target is $95.00.

LEN analyst rating is Buy.

Analysis

5. LEN buy or sell? What is LEN Finny Score?

#{finnyScore:25}Our quantitative analysis shows 2 reasons to buy and 6 reasons to sell LEN, resulting in Finny Score of 25.

6. What are the reasons to buy LEN? Why should I buy LEN stock?

Here are the reasons to buy LEN stock:

  • Current new home demand is still below the long-term historical average. Continued affordability, tighter labor markets, and looser mortgage eligibility standards will drive stronger housing demand.
  • Lennar has an industry-leading owned lot position, which will allow the company to focus on generating positive cash flows and reduce leverage.
  • The company's ancillary Rialto, FivePoint, and Lennar Multifamily segments could create significant shareholder value through potential divestitures.
  • Thanks to strong demand, Lennar’s total revenues grew 15% year over year in fiscal 2017 on the back of a solid 15% rise in homebuilding revenues. This was primarily driven by a 11% increase in the number of home deliveries and a 4.1% rise in the average sales price of the homes delivered. Lennar’s core homebuilding results remain consistent with the “slow and steady” housing recovery.
  • Lennar is considered a leading homebuilder in the United States. The company offers a diversified line of homes for first-time, move-up and active adult homebuyers. The company’s ‘Everything's Included’ marketing program focuses on improving the value of its homes through standard upgrades and competitive pricing.
  • Overall fundamentals of the housing market remained positive through 2016 and 2017 and are expected to improve further in 2018. Steady job and wage growth, a recovering economy, historically low mortgage rates, rising rentals, rapidly increasing household formation and a limited supply of inventory point at strong demand in 2018.
  • Lennar strategically focused on acquiring low-cost new home sites in well-positioned markets during the downturn, which placed it well to meet growing demand during the upturn, thus giving it a competitive edge over its peers facing land availability constraints.
  • While Lennar’s Homebuilding and Financial Services divisions are the primary drivers of near-term revenues and earnings, its ancillary businesses like Multi-Family provide diversification as well as complementary long-term growth opportunities.
  • LEN forward dividend yield is 0.67%, higher than the industry (0.44%) and sector (0.55%) forward dividend yields. See LEN forward dividend chart.
  • LEN average analyst rating is Buy. See LEN analyst rating chart.

7. What are the reasons to sell LEN? Why should I sell LEN stock?

Let's look at the reasons to sell LEN stock (i.e., the bear case):

  • Anemic wage growth, underemployment, and onerous student debt obligations will continue to deter potential first-time homebuyers.
  • Rising interest rates could reduce home ownership affordability and derail the housing recovery.
  • Constrained land supply and rising labor and material costs will limit Lennar's production and/or profitability on delivered homes.
  • Rising land and labor costs are threatening margins as they limit homebuilders’ pricing power. Labor shortages are leading to higher wages while land prices are inflating due to limited availability. More inflation is anticipated, going ahead.
  • Several years of production deficits during the housing downturn limited the supply of both rental and new homes in the country. At present, a shortage of buildable lots, skilled labor and available capital for smaller builders are limiting home production, thereby lowering the inventory of homes, both new and existing. Limited capital for land and land development has left entitled lands in short supply while growing demand drove land prices higher.
  • The housing industry is cyclical and is affected by consumer confidence levels, prevailing economic conditions and interest rates. The federal government’s actions related to economic stimulus, taxation and borrowing limits could affect consumer confidence and spending levels, which, in turn, could hurt both the economy and the housing market.
  • LEN stock price ($78.14) is close to the 52-week high ($79.38). Perhaps now is a good time to sell? See LEN price chart.
  • LEN quarterly revenue growth was -5.00%, lower than the industry and sector average revenue growth (1.26% and 0.78%, respectively). See LEN revenue growth chart.
  • LEN profitability is declining. The YoY profit margin change was -1.92 percentage points. See LEN profitability chart.
  • LEN PEG ratio (P/E adjusted for growth) is 3.85, which is high compared to its industry peers’ PEG ratios. See LEN PEG chart.
  • LEN average analyst price target ($77.07) is below its current price ($78.14). See LEN price target chart.
  • LEN short interest (days to cover the shorts) ratio is 3.61. The stock garners more short interest than the average industry, sector or S&P 500 stock. See LEN short interest ratio chart.

Key Stats

8. What are LEN key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for LEN:

Metrics LEN
Price $77.23
Average Price Target / Upside $77.07 / -0.21%
Average Analyst Rating Buy
Forward Dividend Yield 0.67%
Industry Residential Construction
Sector Consumer Cyclical
Number of Employees 11,626
Market Cap $23.79B
Forward P/E Ratio 11.80
Price/Book Ratio 1.05
Revenue (TTM) $22.62B
YoY Quarterly Revenue Growth -5.00%
Profit Margin 9.30%

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