Lennar logged a -0.1% change during today's morning session, and is now trading at a price of $125.97 per share.
Lennar returned gains of 47.0% last year, with its stock price reaching a high of $133.24 and a low of $69.9. Over the same period, the stock outperformed the S&P 500 index by 42.0%. More recently, the company's 50-day average price was $123.57. Lennar Corporation, together with its subsidiaries, operates as a homebuilder primarily under the Lennar brand in the United States. Based in Miami, FL, the large-cap Consumer Discretionary company has 12,012 full time employees. Lennar has offered a 1.2% dividend yield over the last 12 months.
An Exceptionally Strong Balance Sheet:
| 2019-11-30 | 2020-11-30 | 2021-11-30 | 2022-11-30 | |
|---|---|---|---|---|
| Revenue (MM) | $22,260 | $22,489 | $27,131 | $33,671 |
| Gross Margins | 20.3% | 15.5% | 23.1% | 31.1% |
| Operating Margins | 11.1% | 13.9% | 21.7% | 20.3% |
| Net Margins | 8.31% | 10.96% | 16.33% | 13.7% |
| Net Income (MM) | $1,849 | $2,465 | $4,430 | $4,614 |
| Net Interest Expense (MM) | -$18 | -$22 | n/a | n/a |
| Depreciation & Amort. (MM) | -$92 | -$95 | -$86 | -$87 |
| Earnings Per Share | $5.74 | $7.85 | $14.27 | $14.63 |
| EPS Growth | n/a | 36.76% | 81.78% | 2.52% |
| Diluted Shares (MM) | 318 | 309 | 307 | 258 |
| Free Cash Flow (MM) | $1,396 | $4,118 | $2,468 | $3,208 |
| Capital Expenditures (MM) | -$86 | -$73 | -$65 | -$57 |
| Net Current Assets (MM) | $8,914 | $8,107 | $9,751 | $13,001 |
| Current Ratio | 20.8 | 19.23 | 16.62 | 16.55 |
| Long Term Debt (MM) | $9,574 | $5,956 | $4,652 | $4,047 |
| LT Debt to Equity | 0.6 | 0.33 | 0.22 | 0.17 |
Lennar benefits from exceptional EPS growth, an excellent current ratio, and healthy debt levels. The company's financial statements show growing revenues and decreasing reinvestment in the business and consistent free cash flow. However, the firm has slimmer gross margins than its peers. Finally, we note that Lennar has average net margins with a positive growth rate.
The Market May Be Undervaluing Lennar's Earnings and Assets:
Lennar has a trailing twelve month P/E ratio of 8.4, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of $13.57, the company has a forward P/E ratio of 9.1. According to the 18.8% compound average growth rate of Lennar's historical and projected earnings per share, the company's PEG ratio is 0.45. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 10.1%. On this basis, the company's PEG ratio is 0.84. This suggests that its shares are undervalued. Additionally, the market is possibly undervaluing Lennar in terms of its equity because its P/B ratio is 1.45 whereas the sector average is 3.12. The company's shares are currently trading -12.6% below their Graham number.
There's an Analyst Consensus of Some Upside Potential for Lennar:
The 18 analysts following Lennar have set target prices ranging from $111.0 to $161.0 per share, for an average of $138.11 with a buy rating. As of April 2023, the company is trading -10.5% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Lennar has an average amount of shares sold short because 2.5% of the company's shares are sold short. Institutions own 91.2% of the company's shares, and the insider ownership rate stands at 2.37%, suggesting a large amount of insider shareholders. The largest shareholder is Vanguard Group Inc, whose 11% stake in the company is worth $3,543,146,761.
