Lennar Corporation Just Beat EPS By 6.0%: Here's What Analysts Think Will Happen Next
It's been a pretty great week for Lennar Corporation (NYSE:LEN) shareholders, with its shares surging 11% to US$80.84 in the week since its latest yearly results. Lennar reported US$22b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$7.85 beat expectations, being 6.0% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Lennar
After the latest results, the twelve analysts covering Lennar are now predicting revenues of US$25.4b in 2021. If met, this would reflect a decent 13% improvement in sales compared to the last 12 months. Per-share earnings are expected to ascend 20% to US$9.54. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$24.6b and earnings per share (EPS) of US$8.29 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a solid gain to earnings per share in particular.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$93.20, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Lennar at US$112 per share, while the most bearish prices it at US$77.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Lennar's revenue growth is expected to slow, with forecast 13% increase next year well below the historical 20%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.5% next year. Even after the forecast slowdown in growth, it seems obvious that Lennar is also expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Lennar's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$93.20, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Lennar. Long-term earnings power is much more important than next year's profits. We have forecasts for Lennar going out to 2025, and you can see them free on our platform here.
Even so, be aware that Lennar is showing 1 warning sign in our investment analysis , you should know about...
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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