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Lennar (LEN) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

In the latest trading session, Lennar (LEN) closed at $54.15, marking a +1.98% move from the previous day. This move outpaced the S&P 500's daily gain of 0.03%. At the same time, the Dow added 0.13%, and the tech-heavy Nasdaq lost 0.11%.

Heading into today, shares of the homebuilder had gained 4.22% over the past month, lagging the Construction sector's gain of 7.33% and outpacing the S&P 500's gain of 4.17% in that time.

LEN will be looking to display strength as it nears its next earnings release, which is expected to be October 2, 2019. In that report, analysts expect LEN to post earnings of $1.32 per share. This would mark a year-over-year decline of 5.71%. Our most recent consensus estimate is calling for quarterly revenue of $5.52 billion, down 2.64% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.32 per share and revenue of $21.63 billion, which would represent changes of -16.22% and +5.16%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for LEN. These recent revisions tend to reflect the evolving nature of short-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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Within the past 30 days, our consensus EPS projection has moved 0.17% higher. LEN is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, LEN is holding a Forward P/E ratio of 9.98. This represents a discount compared to its industry's average Forward P/E of 10.35.

It is also worth noting that LEN currently has a PEG ratio of 1.16. 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 industry currently had an average PEG ratio of 1.19 as of yesterday's close.

The Building Products - Home Builders industry is part of the Construction sector. This group has a Zacks Industry Rank of 13, putting it in the top 6% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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