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LEN

Lennar NYSE:LEN Stock Report

Last Price

US$77.48

Market Cap

US$22.0b

7D

2.1%

1Y

-19.6%

Updated

28 Sep, 2022

Data

Company Financials +
LEN fundamental analysis
Snowflake Score
Valuation4/6
Future Growth0/6
Past Performance2/6
Financial Health6/6
Dividends5/6

LEN Stock Overview

Lennar Corporation, together with its subsidiaries, operates as a homebuilder primarily under the Lennar brand in the United States.

Lennar Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Lennar
Historical stock prices
Current Share PriceUS$77.48
52 Week HighUS$117.54
52 Week LowUS$62.54
Beta1.52
1 Month Change-3.03%
3 Month Change9.79%
1 Year Change-19.58%
3 Year Change34.00%
5 Year Change40.10%
Change since IPO2,300.90%

Recent News & Updates

Sep 26

A Dive Into The Housing Market - Part 2: Lennar Is One Of My Top Picks

Summary On a short-term view (1-2 years), the housing market is still undergoing a reset that should persist throughout 2023; however, a crash scenario is remote. Inevitably, high mortgage rates, supply chain constraints, and falling affordability ultimately drive home prices down. Nevertheless, housing demand is high, and accounting for the historically low house inventory levels that cause a significant demand and supply imbalance, the long-term housing outlook is bright. Favorable demographic trends include an influx of first-time homeowners which will deter a significant correction in housing prices. Lennar Corp has solid incentives and pricing structures to ride out the turbulent market environment, earning the buy rating. Research Thesis In Part 1 of this developing sequel, we analyzed the state of the housing market and two promising stocks expected to deliver strong results in the turbulent market environment. Today, we explore the more recent changes in the housing market to justify why a crash scenario is far from happening and why it might be a good time to build a position in high-quality homebuilding stocks such as Lennar Corporation (LEN). The Housing Market Outlook (Update) U.S. housing is amid a cyclical correction as an aggressive FED policy has sent borrowing costs to the highest in over a decade and deteriorated affordability. Industry volume is poised for a moderate decline, with builders putting a halt on new construction as they work through a record backlog. Home prices could also come under pressure after multiple years of continuous gains, particularly in the past two years. Mortgage rates have risen significantly as Federal Reserve policymakers step up efforts to contain persistently high inflation. Last week, the FED boosted rates by 75 basis points for a third straight meeting. Consequently, the 30-year fixed rate, which started this year at 3%, is now close to 6.5%. Data by YCharts A recent report on homebuilder sentiment has shown that sentiment has fallen to its lowest level since May 2014. Moreover, the FED continued its mission to bring down inflation in the 2-3% range and noted in his press talk that the U.S. housing market will likely go through a rebalancing phase. Even though the outlook of the current housing market appears grim, the outright collapse of the housing market is very unlikely as there is still an acute shortage of single-family homes for sale in the market. However, the NAHB index shows the sentiment in the market through monthly surveys of National Association of Home Builders members has fallen for a ninth consecutive month, mainly due to rising interest rates, persisting supply chain disruptions, and housing affordability concerns. Data by YCharts New Residential starts unexpectedly increased by 12.2% in August to 1.58 million units, led by a jump in multifamily projects amounting to 612,000, representing a monthly increase of 28.6% and an annual increase of 31.0%. While the number of home starts in the single-family sector increased by 3.4% month-over-month to a pace of 935,000, although the sector is still experiencing growth, the rate remained 14.6% lower than the previous year. The existing home sales too dropped for a seventh straight month in August as affordability deteriorated further amid surging mortgage rates and persistently high home prices. Recent industry commentary suggests that builders are resorting to cuts in base prices, along with greater use of incentives, to move inventory. I expect this trend to persist, given the significant inventory expected in the coming months. Builders are likely to concede on price and margin to maintain an acceptable level of sales. Data by YCharts Often viewed as an indicator of future construction activity, building applications fell to an annualized 1.52 million, the lowest level since June 2020. The decline in building permits indicates that residential development is under pressure, as rising borrowing rates and prices exacerbate affordability issues and weigh on sales. The inventory of single-family housing under construction fell 0.4% to a rate of 812,000 million units, which shows that builders are likely foregoing applying for new permits while working through their backlogs. Data by YCharts Even with interest rates making housing even less affordable, home prices were still higher than a year ago, supported by tight supply. The median price of an existing home sold in August was $389,500, up 7.7% from a year ago. However, the number of homes for sale fell 1.5% in August to 1.28 million. At the current level of demand, it would take 3.2 months to exhaust the current inventory of existing homes. Anything below five months of supply is seen as indicative of a tight market by realtors. Data by YCharts With many potential homebuyers being priced out of the market, single-family house rentals have increased dramatically in recent years. The booming rental market is also a reason causing the prices of homes to remain elevated. Discouraged by the sluggish housing market and able to benefit from the booming home-rental business, home sellers throughout the United States are deciding to keep their homes and rent them out instead. Higher mortgage interest rates have diminished homebuying demand, and homes have been sitting on the market for a long. In several areas, home values have declined from recent highs, and many sellers are unwilling to reduce their asking prices. As potential sellers shift from selling to renting, the supply of housing for sale is being pulled out of the market. The lack of available houses is a major factor in why prices continue to rise even as sales fall. Data by YCharts The Housing Market Is Not Crashing The drop in demand is mostly caused by increasing interest rates and a faltering economy. Freddie Mac's regression analysis reveals that a 1 percent increase in mortgage rates slows home price growth by around four percentage points. Ultimately, for increasing loan mortgage rates to bring down home prices, we would need significantly less demand and a far greater housing supply than we already have. Although a moderation in home price growth is on the cards, it is quite unlikely that home prices will decline by a big percentage. The current state of the housing market is significantly better than what it was a decade ago as less leverage and a much higher share of equity ownership provide a cushion to the market as opposed to instances in the past which triggered the housing collapse. The key factor preventing a collapse in home values now is inventory scarcity. While housing completions remain subdued (affected by supply chain issues), new supply will keep coming on the market, with a record number of properties under construction. That supply will join with lower demand to cool house-price gains. The recent highs in the housing market were propelled by record-low interest rates in 2020 and 2021, as well as a limited supply due to underbuilding. However, the robust demand from first-time homebuyers is also almost as important as the limited new supply. Data by YCharts As work-from-home becomes more prevalent, it is projected that the housing market will continue to be undersupplied and that migration to lower-cost locations will increase. This is crucial since most expanding cities have a severe housing shortage as a result of a prior population influx. Furthermore, the present housing market is being driven by favorable age demographic trends and is expected to support the supply-demand dynamics in case of a recession. The favorable demographic trends indicate that the solid demand for first-time homeowners will endure. This is because there are still a significant number of younger renters with adequate income to fund homeownership, and they are expected to remain a powerful force for the foreseeable future. In the medium term, as the economy endures numerous headwinds, these variables should continue to influence the housing market. Market Outlook Until The End Of 2022 In the second half of 2022, affordability will be a concern for many, as home prices will continue to rise, and consequently, house price growth will moderate. However, a tight supply-demand dynamic amidst more than a decade of chronic underbuilding in the sector, coupled with millions of millennials entering the homebuying stage of life, will ensure that the sector avoids a major crash, as seen in the past. Lennar Corporation: Top Pick In part 1 of this sequel, we explored D.R. Horton, Inc. (DHI), the largest US homebuilder, and the stock has remained relatively stable since then compared to the sector's SPDR S&P Homebuilders ETF (XHB), while the second-largest homebuilder Lennar, has outperformed both. Even though the stock has crashed roughly 30% YTD, it still remains undervalued, and in today's analysis, we explore why LEN remains a buy. Data by YCharts With the FED continuing to raise interest rates, Lennar is placing a greater emphasis on volume and pricing and will likely lean on incentives. Lennar has beat quarterly earnings estimates for Q3 2022, but the housing market's broader slowdown is reflected in the company's performance. Lennar's new orders fell 12% to 14,366 homes in the third quarter, and the company expects new orders at 14,000 to 15,500 for Q4, which may be optimistic given the current market condition. However, the company considers the tight supply dynamic and offers incentives to maintain its housing pace to attract buyers. The CEO, Lennar's Miller, indicated that the company's sales had been affected by higher mortgage costs, but due to the current supply shortage, the company expects demand to stay strong, allowing better navigation through the rebalancing between pricing and interest rates. In addition to adopting a dynamic-pricing model to ride out the turbulent times in the housing market, Lennar is working closely with its long-term trade partners to adjust their cost structure as per the current market conditions. Moreover, the company has refocused on land acquisition and is adopting a selective approach to new land acquisitions and new communities. In the latest earnings call, the CEO stated: We have re-reviewed and re-underwritten every land deal in our pipeline, and we are re-underwriting to current market conditions. Lennar Is Strengthening Its Leadership Position Lennar is one of the top picks in the sector as LEN offers limited downside risk, given the company's solid market dominance and deep connections in the homebuilding market. As one of the nation's largest builders, Lennar enjoys certain benefits from its scale that some smaller builders may find difficult to replicate. Furthermore, the company has generated above-average margins among public peers over the past several years. Lennar's robust gross margin performance may be attributed to the company's construction efficiency. The company's "Everything's Included" product approach, reduced floor plan selections, and centralized buying have streamlined the construction process, decreasing construction costs and cycle times. In addition, Lennar's scale and reputation in the industry have helped the company build a strong relationship with its suppliers and contractors. I believe this allows Lennar to navigate turbulence in the market smoothly with better negotiating power than its peers. Data by YCharts The first-time buyers will remain the key driver of demand in housing, and Lennar is poised to capture this segment with its increased mix of entry-level homes. In addition, Lennar has a sizable land supply, allowing the business to fulfill future demand while concentrating on increasing cash flows and keeping a healthy balance sheet. The company ended the quarter with 184,000 home sites owned and 307,000 home sites controlled, combining 491,000 home sites. This translates into 2.9 years of home sites owned, an improvement from 3.3 years in the prior year, and 63% home site control, an improvement from 53% in the prior year. The strong portfolio of home sites provides the company with a strong competitive position to continue to grow its market share. The company has made headway on its lighter land acquisition strategy, which aims to lower the amount of capital invested in land by acquiring smaller land parcels and relying more on land options to purchase property on a just-in-time basis. I have previously urged the critical importance of this approach that allows the firm to achieve higher returns on invested capital and cash flows over the current housing cycle. Moreover, it is expected that the company will maintain tight inventory control. Although Lennar's inventory was up 20% YoY at the end of Q3 2022, the company highlighted that the increase in inventory level resulted from supply chain dysfunction and expanded cycle time. The management expects the inventory levels to shrink and generate substantial cash flow in the future.

Sep 20

Lennar Q3 Earnings Preview: A Pivotal Moment

Summary Lennar Corporation is due to report financial results covering the third quarter of its 2022 fiscal year. This will prove to be an important moment for investors given what is going on in this space and it could go a long way to determining the firm's trajectory. LEN stock looks cheap enough, even if financial performance weakens, to offer some long-term upside for investors. Right now, the housing market is in a really interesting spot. Although it's true that the US continues to suffer from a housing shortage, it's also true that rising interest rates, higher inflation, and general concerns about potential economic malaise, have all coalesced to create some real near-term risks for the market. One company that could very well be impacted by this rather soon is Lennar Corporation (LEN), which focuses on the building and selling of homes. Fundamentally, the company has done extraordinarily well as of late. Revenue and profits have been through the roof and shares of the company are trading at incredibly low levels at this time. This creates a rather difficult situation for value-oriented investors. On the one hand, fundamentals likely will deteriorate moving forward. But eventually, the market should post some recovery. My argument is that, in the near term, shares might experience further downside. But ultimately in the long run, even if financial performance reverts back to what it was a couple of years ago, shares would still be trading on the cheap. When management reports financial results covering the third quarter of the company's 2022 fiscal year after the market closes on September 21st, investors will have the first look in three months into how the fundamental strength of the company is currently holding up. Analysts expect positive results, but where the company heads in the near term will likely be determined by new orders, deliveries, and management outlook for the foreseeable future. While I do acknowledge that the near-term outlook for the company is anything but great, I do think that, for long-term investors, now might be a great time to consider initiating a position in the firm or adding on to a position that might already exist. Lennar - Building up to the big moment The last time I wrote an article about Lennar was back in late November of 2021. In that article, I talked about how the company had seen a rise in activity over the prior few years, driven by a surge in demand for housing. I called the company's fundamental condition impressive and said that shares looked cheap on an absolute basis even though they looked more or less fairly valued compared to similar firms. At the end of the day, I called the company a cheap play on the housing market and assigned it a 'buy' rating, reflecting my belief that it would likely outperform the broader market for the foreseeable future. Since then, things have not played out exactly as I anticipated. While the S&P 500 has dropped by 16.2%, shares of Lennar have generated a loss for investors of 25.8%. Author - SEC EDGAR Data At first glance, this might make it seem as though the company's fundamental condition had deteriorated. But that couldn't be further from the truth. Let's consider, for instance, how the company ended its 2021 fiscal year. Revenue for that year came in at $27.13 billion. That represents an increase of 20.6% over the $22.49 billion the firm generated the same time one year earlier. This increase was driven by a couple of key factors. One of them was a rise in the average price that it received for houses that it produced. On homes delivered, the company generated revenue of about $424,000 apiece. Average revenue in 2020, meanwhile, was $394,000. To put this in perspective, this disparity would have added additional revenue of $1.59 billion just based on the number of homes delivered in 2020. But that wasn't the only increase we saw. We also saw deliveries rise to the tune of 13%, climbing from 52,925 to 59,825. This rise in revenue brought with it a nice increase in profits. Net income for the company rose from $2.47 billion to $4.43 billion. Operating cash flow actually dropped from $4.19 billion to $2.53 billion. But if we were to adjust for changes in working capital, it would have increased from $2.87 billion to $4.18 billion. We also saw a nice increase in EBITDA, with the metric rising from $3.70 billion in 2020 to $5.35 billion last year. Author - SEC EDGAR Data So far, the 2022 fiscal year has proven to be remarkably robust for the firm. Revenue in the first half of the year totaled $14.56 billion. That's 23.9% above the $11.76 billion reported one year earlier. This rise was driven again by a sizable increase in the pricing of deliveries from $406,000 in the first half of the 2021 fiscal year to $472,000 the same time this year. In addition to this, the number of deliveries rose from 26,807 to 29,087. As you can see in the data provided in my charts, this strength continued into the second quarter alone as well. Revenue of $8.36 billion beat out the $6.43billion experienced one year earlier. This was thanks to deliveries rising from 14,493 to 16,549. And it was also due in part to prices of homes delivered climbing from $414,000 to $483,000. Author - SEC EDGAR Data As can be expected, this increase in revenue so far this year has been instrumental in pushing some of the company's profitability metrics up. But not every profitability metric showed signs of improvement. In fact, net income reported by the company dropped modestly from $1.83 billion to $1.82 billion. Operating cash flow also declined, dropping from $718.1 million to $52.6 million. If, however, we were to adjust for changes in working capital, it would have risen from $1.73 billion to $2.45 billion. Meanwhile, EBITDA for the company also increased, climbing from $2.1 billion in the first half of 2021 to $3.1 billion the same time this year. Lennar Lennar Lennar After the market closes on September 21st, the management team at Lennar is due to report financial performance covering the third quarter of the company's 2022 fiscal year. This would be an important quarter since it will help us gauge not only how the company has dealt with a difficult housing market in recent months, but also with what management guidance is moving forward. Generally speaking, we do know that things have not been going perfectly when it comes to the housing market. Homebuilder confidence dropped in the month of August, representing the ninth straight month of declines. And the most recent housing starts data was rather disappointing. That number was 1.466 million in August of this year. Not only was that down compared to the 1.554 million reported one year earlier, it also missed analysts' expectations of 1.540 million. Lennar Despite this trend of weakness, analysts have high expectations for the company from a revenue and earnings perspective. The current expectation is for the company to generate revenue of $9.09 billion. That compares to the $6.94 billion reported one year earlier. Earnings per share should be $4.82, or $4.87 on an adjusted basis. This translates to net income of $1.40 billion or $1.41 billion on an adjusted basis. To put this in perspective, earnings per share last year totaled $4.52. That translated to nearly $1.41 billion in profits. All of this is important to keep an eye on, as will be the cash flow of the company. But perhaps the most important thing would be the leading indicators of the company. In its second quarter earnings release, management said that new orders would be between 16,000 and 18,000 homes. They also said that they expect deliveries to be between 17,000 and 18,500, with average sales prices slightly above with the company reported for the second quarter. Any weakness in terms of new orders, deliveries, or sales prices, could be a sign of additional pain in the near term.

Sep 02

How To Profit On Lennar Regardless Of Housing Boom Or Bust

Summary Lennar is a well-respected major homebuilder. It has a dual-class share structure that provides opportunity to those who know how to take advantage. A greater than 20% spread creates a wide arbitrage. Lennar (LEN) has become quite a controversial stock with the wild swings in the housing market. Bulls are attracted to its deep value at a discount to book and extremely high earnings yield, while bears point to the significant cooling seen already this year as mortgage rates soared. I fall on the bullish side of the debate as I think the long-run fundamentals for housing are strong even if there are near-term issues. This article, however, will highlight an arbitrage which provides ample profit potential regardless of which way LEN moves. In such an arbitrage, bankruptcy is just as profitable as LEN getting bought out at $100 per share. We will also discuss risks to the arbitrage. The arbitrage play Arbitrage is not suitable for everyone, but it can be interesting and potentially lucrative for those who understand what they are getting into. Here are the involved securities. Portfolio Income Solutions Arbitrage Tracker This arbitrage can be scaled up or down depending on the size of one's account and how large of an exposure one feels comfortable taking, but for the sake of easy math, lets choose round numbers such as buying and selling 1000 shares. More specifically, here are the legs of the hypothetical arbitrage. Long 1000 shares of LEN.B at $62.81 Short 1000 shares of LEN at $79.28 A spread of $16.47 between the market prices of the two classes of common shares results in proceeds from the pair. The long position costs $62,810 while the short position nets $79,280 resulting in $16,470 of net proceeds. The basic premise is that LEN and LEN.B are almost exactly the same thing which makes this akin to a true arbitrage in which one is buying and selling the same thing at different prices on different markets to net the spread. So in this instance, one is getting $16,470 in "profits" while being left with functionally zero exposure to LEN. If it works, it is essentially free money, but as you know there are always complications. Let's dive into the specifics. Nearly identical securities Lennar Class B common stock (LEN.B) is pari passu with class A Lennar (LEN). Each share of LEN.B is entitled to the same dividend and same liquidation preference as each share of LEN. Thus, in terms of direct financial value they should be worth the same. Here are the vital details of LEN.B. S&P Global Market Intelligence The quarterly dividend rate, ex-dividend date and par value are all the same as LEN Class A shown below. S&P Global Market Intelligence However, there are two minor differences which can have an indirect impact on the value of the securities. LEN.B gets 10X the votes. Both shares get to vote, but LEN.B gets 10 votes per share while LEN only gets one vote. LEN.B is smaller and less liquid with a market cap of $2.3B compared to $20B of LEN class A. The first difference is unequivocally a positive to LEN.B over LEN.A so I think it is the second which causes them to trade at a spread. More than half of the Class B shares are owned by Stuart Miller or related entities as per the 10-K: "As of November 30, 2021, Stuart Miller, the Company's Executive Chairman, directly owned, or controlled through family-owned entities, shares of Class A and Class B common stock, which represented approximately 35% voting power of the Company's stock." Most of his voting power is concentrated in the class B shares because those vote 10X. With his large and static ownership, the actual float of LEN.B is smaller than one would anticipate for a $2.3B security which results in an even greater liquidity disparity between the issues. As you can see below LEN has an average daily volume of 2.7 million shares while LEN.B trades just 100K shares per day on the NYSE. S&P Global Market Intelligence Further exacerbating the liquidity differential is the fact that LEN is in the S&P 500 index while LEN.B is not. Since so much of the market trading volume is through ETFs that passively follow major indices like the S&P 500, LEN.B is missing out on all those trades. All of these factors influence the price at which LEN.B trades relative to the price at which LEN trades, but they do not actually impact the financial value of LEN.B which should be the same as LEN. That is the arbitrage. We have the opportunity to take advantage of the market's inefficiency to buy the same thing for 21% less which provides 26% upside to LEN.B shares if and when they close the gap. Are they really the same thing? While I think most would agree that the market can be inefficient, a gap of this magnitude based simply on LEN being more liquid seems a bit extreme. I was skeptical, so I dug through Lennar's SEC filings to verify that they are in fact pari passu. From the annual report: "Liquidation Rights- We currently have no outstanding preferred stock or participating preferred stock. While that continues to be the case, if we are liquidated, the holders of our Class A and Class B common stock will be entitled to share equally on a per share basis, without regard to class, in the assets available for distribution after we have satisfied our debts and liabilities. If we are liquidated at a time when there are outstanding shares of preferred stock, but not of participating preferred stock, the holders of our Class A and Class B common stock will be entitled to share equally on a per share basis, without regard to class, in the assets available for distribution after we have satisfied our debts and liabilities and made any distributions we are required to make with regard to the preferred stock." That legal mumbo jumbo basically just says the common shares are below the debt and preferred in the waterfall and that LEN and LEN.B get the same proceeds as each other. That is great, but sometimes management tries to pull the wool over the eyes of one class of shareholders to benefit the other. I find that unlikely to go against the B for three reasons: The Class B shares have a disproportionate voting power The chairman has a massive financial interest in LEN.B LEN.B shareholders can convert their shares to LEN at any time by majority vote. Again from the 10-K: "Termination of Class Rights and Powers If at any time (i) the number of outstanding shares of our Class B common stock is less than 10% of the number of outstanding shares of Class A common stock and Class B common stock taken together, or (ii) the holders of a majority of the outstanding shares of Class B common stock vote to cause all the Class B common stock to be converted into Class A common stock, the Class B common stock will automatically be converted into, and become for all purposes, shares of Class A common stock, and we will no longer be authorized to issue Class B common stock." Based on the above reasons, I think LEN.B is financially worth the same amount as LEN. Getting back to the math of the arbitrage. In buying 1000 shares of LEN.B and shorting 1000 shares of LEN at today's pricing one nets $16,470 in proceeds. The dividends on the B are the same as on the A so there is no dividend cost to carry. While one does get the $16,470 up front, they do have to maintain their positions in the two securities continuously. Thus, this $16,470 only becomes a true profit if and when one can close out the positions at the same price. Pathways to realizing the arbitrage Here are some ways in which the pricing gap between LEN and LEN.B could close. Natural closing of gap in market price Conversion by voluntary vote Conversion by governance encouraged vote Sale of company Bankruptcy of Lennar I am of the believe that the gap should close naturally because the securities entitle one to the same assets and cashflows. However, the market can stay irrational for a very long time and given that the gap has been roughly this large for 10 years, I don't see it as particularly likely that it will naturally close. 2nd Market Capital Conversion by voluntary vote This is cleanest and easiest way to realize the arbitrage profit. If the majority of LEN.B shareholders vote for conversion each share of LEN.B becomes a share of LEN so instead of having + 1000 shares of LEN.B and -1000 shares of LEN the arbitrageur would be netted out to just not have any shares. The $16,470 would be theirs to keep and there would no longer be a need to hold positions. The impediment to this happening is that the majority of shares are held by Stuart Miller. Presumably he is maintaining the super voting shares rather than converting so that he can have greater control of Lennar which he has been with for decades. Such insider control via dual share classes is popular among tech companies, but occasionally it is seen outside of tech as well. Perhaps one day Stuart Miller will decide he wants to fully retire and just take the massive profit that comes with conversion of his shares to LEN class A, but I would not hold my breath. Lennar He is 64 years old and has recently transitioned to be chairman rather than CEO. Chairman is a much less active role allowing someone to semi-retire while still being important. It is not uncommon to see people stay as chairman well into their 80s.

Shareholder Returns

LENUS Consumer DurablesUS Market
7D2.1%-0.3%-2.0%
1Y-19.6%-32.7%-20.3%

Return vs Industry: LEN exceeded the US Consumer Durables industry which returned -35.6% over the past year.

Return vs Market: LEN exceeded the US Market which returned -22.1% over the past year.

Price Volatility

Is LEN's price volatile compared to industry and market?
LEN volatility
LEN Average Weekly Movement5.2%
Consumer Durables Industry Average Movement6.3%
Market Average Movement6.9%
10% most volatile stocks in US Market15.8%
10% least volatile stocks in US Market2.8%

Stable Share Price: LEN is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: LEN's weekly volatility (5%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
195410,753Jon Jaffehttps://www.lennar.com

Lennar Corporation, together with its subsidiaries, operates as a homebuilder primarily under the Lennar brand in the United States. It operates through Homebuilding East, Homebuilding Central, Homebuilding Texas, Homebuilding West, Financial Services, Multifamily, and Lennar Other segments. The company’s homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development, and sale of residential land; and development, construction, and management of multifamily rental properties.

Lennar Fundamentals Summary

How do Lennar's earnings and revenue compare to its market cap?
LEN fundamental statistics
Market CapUS$21.99b
Earnings (TTM)US$4.43b
Revenue (TTM)US$31.93b

5.1x

P/E Ratio

0.7x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
LEN income statement (TTM)
RevenueUS$31.93b
Cost of RevenueUS$22.48b
Gross ProfitUS$9.02b
Other ExpensesUS$4.59b
EarningsUS$4.43b

Last Reported Earnings

Aug 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)15.20
Gross Margin28.24%
Net Profit Margin13.87%
Debt/Equity Ratio17.5%

How did LEN perform over the long term?

See historical performance and comparison

Dividends

1.9%

Current Dividend Yield

9%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is LEN undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for LEN?

Other financial metrics that can be useful for relative valuation.

LEN key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue0.8x
Enterprise Value/EBITDA4.1x
PEG Ratio-0.4x

Price to Earnings Ratio vs Peers

How does LEN's PE Ratio compare to its peers?

LEN PE Ratio vs Peers
The above table shows the PE ratio for LEN vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average5.5x
DHI D.R. Horton
4.5x-12.4%US$24.8b
NVR NVR
8.8x-15.9%US$13.5b
PHM PulteGroup
4.1x-9.8%US$9.1b
TOL Toll Brothers
4.8x-4.1%US$4.9b
LEN Lennar
5.1x-11.8%US$22.0b

Price-To-Earnings vs Peers: LEN is good value based on its Price-To-Earnings Ratio (5.1x) compared to the peer average (5.5x).


Price to Earnings Ratio vs Industry

How does LEN's PE Ratio compare vs other companies in the US Consumer Durables Industry?

Price-To-Earnings vs Industry: LEN is good value based on its Price-To-Earnings Ratio (5.1x) compared to the US Consumer Durables industry average (6.1x)


Price to Earnings Ratio vs Fair Ratio

What is LEN's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

LEN PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio5.1x
Fair PE Ratio10.9x

Price-To-Earnings vs Fair Ratio: LEN is good value based on its Price-To-Earnings Ratio (5.1x) compared to the estimated Fair Price-To-Earnings Ratio (10.9x).


Share Price vs Fair Value

What is the Fair Price of LEN when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: LEN ($77.48) is trading below our estimate of fair value ($91.14)

Significantly Below Fair Value: LEN is trading below fair value, but not by a significant amount.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.


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Future Growth

How is Lennar forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


-11.8%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: LEN's earnings are forecast to decline over the next 3 years (-11.8% per year).

Earnings vs Market: LEN's earnings are forecast to decline over the next 3 years (-11.8% per year).

High Growth Earnings: LEN's earnings are forecast to decline over the next 3 years.

Revenue vs Market: LEN's revenue is expected to decline over the next 3 years (-1.7% per year).

High Growth Revenue: LEN's revenue is forecast to decline over the next 3 years (-1.7% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: LEN's Return on Equity is forecast to be low in 3 years time (11.3%).


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Past Performance

How has Lennar performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


32.4%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: LEN has high quality earnings.

Growing Profit Margin: LEN's current net profit margins (13.9%) are lower than last year (16%).


Past Earnings Growth Analysis

Earnings Trend: LEN's earnings have grown significantly by 32.4% per year over the past 5 years.

Accelerating Growth: LEN's earnings growth over the past year (8.8%) is below its 5-year average (32.4% per year).

Earnings vs Industry: LEN earnings growth over the past year (8.8%) underperformed the Consumer Durables industry 29%.


Return on Equity

High ROE: LEN's Return on Equity (19.4%) is considered low.


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Financial Health

How is Lennar's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: LEN's short term assets ($24.8B) exceed its short term liabilities ($1.6B).

Long Term Liabilities: LEN's short term assets ($24.8B) exceed its long term liabilities ($10.7B).


Debt to Equity History and Analysis

Debt Level: LEN's net debt to equity ratio (11.9%) is considered satisfactory.

Reducing Debt: LEN's debt to equity ratio has reduced from 89.7% to 17.5% over the past 5 years.

Debt Coverage: LEN's debt is well covered by operating cash flow (46%).

Interest Coverage: LEN's interest payments on its debt are well covered by EBIT (295.6x coverage).


Balance Sheet


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Dividend

What is Lennar current dividend yield, its reliability and sustainability?

Dividend Score

5/6

Dividend Score 5/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


1.93%

Current Dividend Yield

Dividend Yield vs Market

Lennar Dividend Yield vs Market
How does Lennar dividend yield compare to the market?
SegmentDividend Yield
Company (Lennar)1.9%
Market Bottom 25% (US)1.6%
Market Top 25% (US)4.6%
Industry Average (Consumer Durables)2.7%
Analyst forecast in 3 Years (Lennar)2.1%

Notable Dividend: LEN's dividend (1.94%) is higher than the bottom 25% of dividend payers in the US market (1.67%).

High Dividend: LEN's dividend (1.94%) is low compared to the top 25% of dividend payers in the US market (4.69%).


Stability and Growth of Payments

Stable Dividend: LEN's dividends per share have been stable in the past 10 years.

Growing Dividend: LEN's dividend payments have increased over the past 10 years.


Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (9.1%), LEN's dividend payments are thoroughly covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: With its low cash payout ratio (24.1%), LEN's dividend payments are well covered by cash flows.


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Management

How experienced are the management team and are they aligned to shareholders interests?

4.0yrs

Average management tenure


CEO

Jon Jaffe (62 yo)

4.42yrs

Tenure

US$34,045,217

Compensation

Mr. Jonathan M. Jaffe, also known as Jon, has been the Co-Chief Executive Officer and Co-President of Lennar Corporation since November 2020. He has been a Director of Lennar Corporation since April 12, 20...


CEO Compensation Analysis

Jon Jaffe's Compensation vs Lennar Earnings
How has Jon Jaffe's remuneration changed compared to Lennar's earnings?
DateTotal Comp.SalaryCompany Earnings
Aug 31 2022n/an/a

US$4b

May 31 2022n/an/a

US$4b

Feb 28 2022n/an/a

US$4b

Nov 30 2021US$34mUS$800k

US$4b

Aug 31 2021n/an/a

US$4b

May 31 2021n/an/a

US$3b

Feb 28 2021n/an/a

US$3b

Nov 30 2020US$19mUS$800k

US$2b

Aug 31 2020n/an/a

US$2b

May 31 2020n/an/a

US$2b

Feb 29 2020n/an/a

US$2b

Nov 30 2019US$16mUS$800k

US$2b

Aug 31 2019n/an/a

US$2b

May 31 2019n/an/a

US$2b

Feb 28 2019n/an/a

US$2b

Nov 30 2018US$16mUS$800k

US$2b

Aug 31 2018n/an/a

US$1b

May 31 2018n/an/a

US$996m

Feb 28 2018n/an/a

US$900m

Nov 30 2017US$15mUS$800k

US$803m

Aug 31 2017n/an/a

US$806m

May 31 2017n/an/a

US$793m

Feb 28 2017n/an/a

US$798m

Nov 30 2016US$15mUS$800k

US$903m

Aug 31 2016n/an/a

US$871m

May 31 2016n/an/a

US$858m

Feb 29 2016n/an/a

US$823m

Nov 30 2015US$14mUS$800k

US$794m

Compensation vs Market: Jon's total compensation ($USD34.05M) is above average for companies of similar size in the US market ($USD13.05M).

Compensation vs Earnings: Jon's compensation has increased by more than 20% in the past year.


Leadership Team

Experienced Management: LEN's management team is considered experienced (4 years average tenure).


Board Members

Experienced Board: LEN's board of directors are seasoned and experienced ( 10.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: LEN insiders have only sold shares in the past 3 months.


Recent Insider Transactions

NYSE:LEN Recent Insider Transactions by Companies or Individuals
DateValueNameEntityRoleSharesMax Price
21 Jul 22SellUS$1,230,000David CollinsIndividual15,000US$82.00
11 May 22SellUS$1,577,180Mark SustanaIndividual22,000US$71.69

Ownership Breakdown

What is the ownership structure of LEN?
Owner TypeNumber of SharesOwnership Percentage
State or Government114,3510.04%
General Public10,714,1513.7%
Individual Insiders26,673,6939.2%
Institutions253,884,19387.1%

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Top 25 shareholders own 65.79% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
10.25%
The Vanguard Group, Inc.
29,865,601$2.3b0.73%0.05%
8%
Stuart Miller
23,302,917$1.8b0%no data
7.58%
BlackRock, Inc.
22,074,469$1.7b-2.22%0.04%
5.15%
Aristotle Capital Management, LLC
14,998,737$1.2b-2.43%2.54%
3.98%
Wellington Management Group LLP
11,601,844$898.9m45.57%0.16%
3.94%
State Street Global Advisors, Inc.
11,493,581$890.5m-4.3%0.05%
3.82%
Manulife Asset Management
11,127,461$862.2m-11.81%0.81%
3.4%
Greenhaven Associates Inc
9,895,731$766.7m24.25%16.55%
3.21%
FMR LLC
9,359,106$725.1m-24.67%0.07%
1.81%
Geode Capital Management, LLC
5,276,497$408.8m0.4%0.05%
1.42%
Principal Global Investors, LLC
4,133,581$320.3m-1.48%0.22%
1.24%
Dimensional Fund Advisors LP
3,608,088$279.6m6.97%0.07%
1.12%
Capital Research and Management Company
3,260,517$252.6m0%0.02%
1.08%
Northern Trust Global Investments
3,138,693$243.2m-4.06%0.05%
0.99%
Norges Bank Investment Management
2,888,878$223.8m0%0.03%
0.97%
Sanders Capital, LLC
2,835,375$219.7m-0.48%0.57%
0.96%
Managed Account Advisors LLC
2,790,995$216.2m-3.11%0.06%
0.95%
J.P. Morgan Asset Management, Inc.
2,772,172$214.8m6.61%0.04%
0.95%
Fondsmaeglerselskabet Maj Invest A/S
2,762,255$214.0m12.18%3.93%
0.91%
ACR Alpine Capital Research, LLC
2,656,723$205.8m2212.14%9.84%
0.86%
Smead Capital Management, Inc.
2,507,093$194.2m7.16%4.98%
0.85%
Columbia Management Investment Advisers, LLC
2,489,068$192.9m-4.14%0.06%
0.81%
BNY Mellon Asset Management
2,374,153$183.9m0.74%0.04%
0.81%
Neuberger Berman Investment Advisers LLC
2,366,347$183.3m-3.18%0.18%
0.73%
GAMCO Investors, Inc.
2,135,069$165.4m-0.24%0.56%

Company Information

Lennar Corporation's employee growth, exchange listings and data sources


Key Information

  • Name: Lennar Corporation
  • Ticker: LEN
  • Exchange: NYSE
  • Founded: 1954
  • Industry: Homebuilding
  • Sector: Consumer Durables
  • Implied Market Cap: US$21.987b
  • Shares outstanding: 291.39m
  • Website: https://www.lennar.com

Number of Employees


Location

  • Lennar Corporation
  • 700 Northwest 107th Avenue
  • Miami
  • Florida
  • 33172
  • United States


Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
LENNYSE (New York Stock Exchange)YesClass A Common StockUSUSDJun 1971
LNNDB (Deutsche Boerse AG)YesClass A Common StockDEEURJun 1971
LEN *BMV (Bolsa Mexicana de Valores)YesClass A Common StockMXMXNJun 1971
0JU0LSE (London Stock Exchange)YesClass A Common StockGBUSDJun 1971
LEN.BNYSE (New York Stock Exchange)Class B Common StockUSUSDApr 2003
LENB *BMV (Bolsa Mexicana de Valores)Class B Common StockMXMXNApr 2003
LNN0DB (Deutsche Boerse AG)Class B Common StockDEEURApr 2003
L1EN34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH REPR 1 COMBRBRLDec 2019

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/09/28 00:00
End of Day Share Price2022/09/28 00:00
Earnings2022/08/31
Annual Earnings2021/11/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.