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Valued at a market cap of $45.6 billion, Miami, Florida-based Lennar Corporation (LEN) is a leading U.S. homebuilder specializing in single-family and multifamily residential construction. With operations spanning homebuilding, financial services, and fund investments, it serves diverse buyers, including first-time, move-up, active adult, and luxury homebuyers.
Shares of the homebuilder have outperformed the broader market over the past 52 weeks. LEN has risen 33.1% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 30.9%. However, in 2024, shares of LEN are up 13.8%, lagging behind SPX’s 25.1% gain on a YTD basis.
Focusing more closely, Lennar has also outpaced the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 28.8% return over the past 52 weeks.
Despite reporting better-than-expected Q3 adjusted EPS of $3.90 and revenue of $9.4 billion on Sep. 19, Lennar's shares fell 5.3% the next day due to a 190-basis-point decline in home sales gross margin, which missed investor expectations. The company also provided weak Q4 guidance, forecasting lower home deliveries of 22,500 units to 23,000 units and a drop in average selling price (ASP) to around $425,000. Additionally, the expected decline in Financial Services operating earnings to around $140 million raised concerns about overall profitability.
For the current fiscal year, ending in November, analysts expect LEN’s EPS to decline marginally year-over-year to $14.18. However, the company's earnings surprise history is promising. It topped the consensus estimates in the last four quarters.
Among the 19 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on eight “Strong Buy” ratings, one “Moderate Buy,” nine “Holds,” and one “Strong Sell.”
On Nov. 21, Bank of America Securities analyst Rafe Jadrosich reaffirmed a “Hold” rating on Lennar while maintaining a price target of $190.
As of writing, LEN is trading below the mean price target of $199.36. The Street-high price target of $236, implies a potential upside of 40.4% from the current price levels.
