Is Lennar’s Stock Worth Watching After a 9.8% Drop in 2025?

• Wondering if Lennar’s stock price is a bargain or just riding a wave? You’re not alone, and we’re about to dive into whether this homebuilder giant deserves a place on your watchlist.
• The share price has seen mixed fortunes recently, slipping 2.4% over the past week, 4.1% over the last month, and 9.8% year-to-date, but boasting a strong 74.4% gain over three years and 84.9% over five years.
• There’s been a recent flurry of headlines around the broader housing market: mortgage rates have stayed higher than anticipated and discussions of supply constraints are popping up again. This has added volatility across homebuilder stocks like Lennar. Analysts and investors alike are watching these macro trends closely to see how they might shape industry performance this year.
• Lennar earns a valuation score of just 1 out of 6 on our standard checks, which raises some tough questions about its current price. Before jumping to conclusions, we’ll explore several valuation approaches together and share an even deeper way to think about what Lennar is truly worth at the end of this article.

Lennar scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Lennar Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and then discounting those cash flows back to today's value. This approach helps investors understand what Lennar could be worth based solely on the cash it is expected to generate.

As of the latest reporting, Lennar's Free Cash Flow has been negative at approximately $702 million. However, analysts forecast a turnaround, expecting Free Cash Flow to grow substantially to $2.15 billion by 2026. After this initial growth phase, future projections reflect gradually decreasing annual cash flows, dipping to around $1.35 billion by 2035. It is important to note that while the first five years are based on analyst estimates, subsequent years are extrapolated to provide a long-term perspective.

Using these projections, the DCF model arrives at an estimated intrinsic value for Lennar of $81.20 per share. When compared to the current share price, this suggests Lennar is trading at a 49.2% premium to its calculated fair value, making it significantly overvalued based on future cash flow projections alone.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Lennar may be overvalued by 49.2%. Discover 836 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Lennar.

Approach 2: Lennar Price vs Earnings

The Price-to-Earnings (PE) ratio is a popular way to value profitable companies like Lennar because it directly relates a company’s share price to its bottom-line profits. Investors often use the PE ratio to get a quick sense of whether a company’s stock might be cheap or expensive compared to its earnings power.

While a lower PE ratio can catch investors’ attention, it’s important to remember that what counts as a “fair” PE depends on expectations for future growth and how much risk investors are willing to accept. Higher growth prospects or lower risk often justify a higher PE ratio, while uncertainty or slower growth make a lower PE more reasonable.

Currently, Lennar trades at a PE ratio of 11.63x. This is right in line with the Consumer Durables industry average of 10.86x and the peer group average of 11.12x, suggesting Lennar is valued similarly to its competitors if we rely on traditional benchmarks. However, Simply Wall St’s proprietary “Fair Ratio” takes a deeper look by factoring in not just industry and peer numbers but also Lennar’s unique qualities, such as its earnings growth outlook, profit margins, size, and company-specific risks. For Lennar, the Fair Ratio is 15.41x, which is meaningfully higher than its current multiple.

Because the Fair Ratio reflects a more tailored and forward-looking assessment, it provides a stronger foundation for understanding what Lennar’s PE “should” be. Comparing the Fair Ratio of 15.41x with the actual PE of 11.63x, Lennar looks undervalued on this metric.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1406 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Lennar Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your opportunity to connect Lennar’s story, explaining why the business is positioned for future success or faces unique challenges, directly to specific forecasts and a calculated fair value. Instead of simply accepting headline numbers, Narratives let you bring your own view on Lennar’s revenue, future earnings, and profit margins into a structured, personalized estimate of what the company is truly worth.

This approach is designed to be easy and accessible. On Simply Wall St’s Community page, millions of investors already use Narratives to build their investment case, see how others are interpreting new developments, and compare Fair Value to the current market price when making buy or sell decisions. Importantly, Narratives update dynamically as new news, earnings, or company updates arrive, automatically reflecting the latest information for a more real-time view.

For example, some investors view Lennar as a long-term winner and set price targets above $215 based on confidence in future growth and margin recovery. Others are more cautious, looking at analyst price targets as low as $95 and seeing limited upside amid near-term headwinds. Narratives turn these perspectives into numbers, helping you invest with conviction and clarity.

Do you think there's more to the story for Lennar? Head over to our Community to see what others are saying!

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.

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