U.S. Markets close in 5 hrs 47 mins
  • S&P 500

    3,676.97
    +7.96 (+0.22%)
     
  • Dow 30

    30,010.28
    +126.49 (+0.42%)
     
  • Nasdaq

    12,421.71
    +72.35 (+0.59%)
     
  • Russell 2000

    1,845.32
    +7.30 (+0.40%)
     
  • Crude Oil

    45.18
    -0.10 (-0.22%)
     
  • Gold

    1,837.10
    +6.90 (+0.38%)
     
  • Silver

    24.08
    -0.00 (-0.02%)
     
  • EUR/USD

    1.2168
    +0.0053 (+0.4381%)
     
  • 10-Yr Bond

    0.9290
    -0.0190 (-2.00%)
     
  • Vix

    20.94
    -0.23 (-1.09%)
     
  • GBP/USD

    1.3483
    +0.0107 (+0.7995%)
     
  • USD/JPY

    103.7070
    -0.7170 (-0.6866%)
     
  • BTC-USD

    19,327.33
    +378.07 (+2.00%)
     
  • CMC Crypto 200

    379.84
    +5.43 (+1.45%)
     
  • FTSE 100

    6,474.14
    +10.75 (+0.17%)
     
  • Nikkei 225

    26,809.37
    +8.39 (+0.03%)
     

Will Lennar (LEN) Beat Estimates Again in Its Next Earnings Report?

Zacks Equity Research
·3 min read

Have you been searching for a stock that might be well-positioned to maintain its earnings-beat streak in its upcoming report? It is worth considering Lennar (LEN), which belongs to the Zacks Building Products - Home Builders industry.

This homebuilder has an established record of topping earnings estimates, especially when looking at the previous two reports. The company boasts an average surprise for the past two quarters of 40.46%.

For the most recent quarter, Lennar was expected to post earnings of $1.29 per share, but it reported $1.65 per share instead, representing a surprise of 27.91%. For the previous quarter, the consensus estimate was $0.83 per share, while it actually produced $1.27 per share, a surprise of 53.01%.

Price and EPS Surprise

Thanks in part to this history, there has been a favorable change in earnings estimates for Lennar lately. In fact, the Zacks Earnings ESP (Expected Surprise Prediction) for the stock is positive, which is a great indicator of an earnings beat, particularly when combined with its solid Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat the consensus estimate could be as high as seven.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Lennar currently has an Earnings ESP of +3.77%, which suggests that analysts have recently become bullish on the company's earnings prospects. This positive Earnings ESP when combined with the stock's Zacks Rank #3 (Hold) indicates that another beat is possibly around the corner. We expect the company's next earnings report to be released on September 14, 2020.

Investors should note, however, that a negative Earnings ESP reading is not indicative of an earnings miss, but a negative value does reduce the predictive power of this metric.

Many companies end up beating the consensus EPS estimate, though this is not the only reason why their shares gain. Additionally, some stocks may remain stable even if they end up missing the consensus estimate.

Because of this, it's really important to check a company's Earnings ESP ahead of its quarterly release to increase the odds of success. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Lennar Corporation (LEN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research