At US$102, Is It Time To Put Lennar Corporation (NYSE:LEN) On Your Watch List?

By
Simply Wall St
Published
October 21, 2021
NYSE:LEN
Source: Shutterstock

Let's talk about the popular Lennar Corporation (NYSE:LEN). The company's shares saw a decent share price growth in the teens level on the NYSE over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Lennar’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Lennar

What's the opportunity in Lennar?

Good news, investors! Lennar is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $133.06, but it is currently trading at US$102 on the share market, meaning that there is still an opportunity to buy now. However, given that Lennar’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Lennar generate?

earnings-and-revenue-growth
NYSE:LEN Earnings and Revenue Growth October 21st 2021

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -1.8% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Lennar. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although LEN is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to LEN, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on LEN for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into Lennar, you'd also look into what risks it is currently facing. Case in point: We've spotted 1 warning sign for Lennar you should be aware of.

If you are no longer interested in Lennar, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.


Simply Wall St character - Warren

Simply Wall St

Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.