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Lennar (LEN) Scales a New 52-Week High on Robust Demand
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Shares of Lennar Corporation (LEN - Free Report) scaled a new 52-week high of $50.81 on Mar 7. In fact, this homebuilding stock rose 1.5% to 50.71, marking its best level since Dec 2015. Year to date, the stock has climbed 18.1%, outperforming the Zacks categorized Building-Residential/Commercial industry’s growth of 14.8%.
What’s Driving It?
Barclays expects homebuilders to surpass first-quarter orders, as its February survey revealed solid early spring demand and also several catalysts to the industry. The brokerage firm also expects major homebuilders like PulteGroup, Inc. (PHM - Free Report) , Lennar, and TRI Pointe Group Inc (TPH - Free Report) to benefit from these positive trends.
As noted by Barclays’ analyst Michael Dahl, “We still see modest further near-term upside as builders are likely to report 1Q order beats (Barclays' 1Q order growth est. +13% compared with consensus +9%), against a backdrop of current sentiment remaining somewhat negative”.
The survey also showed that the Buyer Traffic Index increased to 67 in February from 65 a month ago, representing better traffic trends according to AGENTS survey. The analyst said that given the strong traffic, buyers are taking advantage on expectations of higher future mortgage rates and home prices.
Meanwhile, LGI Homes, Inc. (LGIH - Free Report) stock rallied over 12% on Tuesday after the homebuilder reported better-than-expected fourth-quarter earnings and gave bullish guidance for 2017.
Against this backdrop, homebuilding stocks such as Lennar, KB Home (KBH - Free Report) , Toll Brothers Inc. (TOL - Free Report) , Pulte Group and D.R. Horton (DHI - Free Report) rose modestly.
Despite concerns regarding the possibility of a series of interest rate hikes by the Federal Reserve, optimism surrounding the housing market remains largely unscathed. Homebuilding stocks continue to advance on healthy demand-supply balance, stronger economic growth, tight inventory, modest wage growth, low unemployment levels and positive consumer confidence.
Investors could also take advantage of near-term opportunities and cash in on any sudden surge in the homebuilding sector.
Lennar is one of the best-positioned homebuilders to capitalize on housing recovery driven by diverse revenue mix, steady top-line performance, above-average order growth and improving SG&A leverage.
After a strong performance in 2014 and 2015, Lennar delivered outstanding operating results in 2016, beating the Zacks Consensus Estimate for both earnings and sales in all the four quarters of 2016, resulting in an average positive surprise of 12.66%.
The stock also flaunts a VGM score of “A” and a 3–5 year expected EPS growth rate of 7.96%.
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Lennar (LEN) Scales a New 52-Week High on Robust Demand
Shares of Lennar Corporation (LEN - Free Report) scaled a new 52-week high of $50.81 on Mar 7. In fact, this homebuilding stock rose 1.5% to 50.71, marking its best level since Dec 2015. Year to date, the stock has climbed 18.1%, outperforming the Zacks categorized Building-Residential/Commercial industry’s growth of 14.8%.
What’s Driving It?
Barclays expects homebuilders to surpass first-quarter orders, as its February survey revealed solid early spring demand and also several catalysts to the industry. The brokerage firm also expects major homebuilders like PulteGroup, Inc. (PHM - Free Report) , Lennar, and TRI Pointe Group Inc (TPH - Free Report) to benefit from these positive trends.
As noted by Barclays’ analyst Michael Dahl, “We still see modest further near-term upside as builders are likely to report 1Q order beats (Barclays' 1Q order growth est. +13% compared with consensus +9%), against a backdrop of current sentiment remaining somewhat negative”.
The survey also showed that the Buyer Traffic Index increased to 67 in February from 65 a month ago, representing better traffic trends according to AGENTS survey. The analyst said that given the strong traffic, buyers are taking advantage on expectations of higher future mortgage rates and home prices.
Meanwhile, LGI Homes, Inc. (LGIH - Free Report) stock rallied over 12% on Tuesday after the homebuilder reported better-than-expected fourth-quarter earnings and gave bullish guidance for 2017.
Against this backdrop, homebuilding stocks such as Lennar, KB Home (KBH - Free Report) , Toll Brothers Inc. (TOL - Free Report) , Pulte Group and D.R. Horton (DHI - Free Report) rose modestly.
Despite concerns regarding the possibility of a series of interest rate hikes by the Federal Reserve, optimism surrounding the housing market remains largely unscathed. Homebuilding stocks continue to advance on healthy demand-supply balance, stronger economic growth, tight inventory, modest wage growth, low unemployment levels and positive consumer confidence.
Investors could also take advantage of near-term opportunities and cash in on any sudden surge in the homebuilding sector.
Lennar is one of the best-positioned homebuilders to capitalize on housing recovery driven by diverse revenue mix, steady top-line performance, above-average order growth and improving SG&A leverage.
After a strong performance in 2014 and 2015, Lennar delivered outstanding operating results in 2016, beating the Zacks Consensus Estimate for both earnings and sales in all the four quarters of 2016, resulting in an average positive surprise of 12.66%.
The stock also flaunts a VGM score of “A” and a 3–5 year expected EPS growth rate of 7.96%.
Zacks Rank
Lennar carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>