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Lennar (LEN) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

Lennar (LEN) closed the most recent trading day at $58.86, moving -1.32% from the previous trading session. This change lagged the S&P 500's 0.86% loss on the day. Elsewhere, the Dow lost 0.96%, while the tech-heavy Nasdaq lost 1.13%.

Heading into today, shares of the homebuilder had gained 0.08% over the past month, lagging the Construction sector's gain of 0.73% and the S&P 500's gain of 3.66% in that time.

Investors will be hoping for strength from LEN as it approaches its next earnings release. On that day, LEN is projected to report earnings of $1.90 per share, which would represent a year-over-year decline of 3.06%. Our most recent consensus estimate is calling for quarterly revenue of $6.70 billion, up 3.67% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.49 per share and revenue of $21.83 billion. These totals would mark changes of -13.54% and +6.1%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for LEN. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. LEN is currently a Zacks Rank #2 (Buy).

In terms of valuation, LEN is currently trading at a Forward P/E ratio of 10.86. This represents a premium compared to its industry's average Forward P/E of 10.84.

Also, we should mention that LEN has a PEG ratio of 1.21. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Building Products - Home Builders was holding an average PEG ratio of 1.18 at yesterday's closing price.

The Building Products - Home Builders industry is part of the Construction sector. This industry currently has a Zacks Industry Rank of 35, which puts it in the top 14% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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