Back to top

Analyst Blog

On Feb 18, we reverted back to a Neutral rating on U.S. homebuilder, Lennar Corporation (LEN - Analyst Report) from Outperform, as we await a more sustainable recovery in the overall economy. Lennar also carries a Zacks Rank #3 (Hold).

Why Back to Neutral?

Lennar has witnessed solid year-over-year growth in new home orders, average selling prices and home closings in all the quarters of 2012. Margins have also been above average despite rising costs, driven by strong operating leverage. We believe that the company is performing better than its peers by increasing sales prices, reducing incentives, improving volumes and making opportunistic land acquisitions.

Though witnessing an improving trend, the U.S. new home demand remains at historically low levels due to the current weak U.S. economic conditions and tight mortgage lending standards. Sustainable increases in housing and housing demand for the long term will require the overall economy to strengthen, including further job growth. Consumers will remain cautious until job growth, continued home price appreciation and easier access to credit improve their confidence. Further, the pending federal budget decisions could potentially disrupt the housing recovery. Moreover, the housing recovery was uneven and not broad based with some markets showing more upward momentum than others. A sustainable housing recovery in the long term can be achieved only through a broad-based recovery in the overall economy, which we believe will take time. We thus revert back to a Neutral rating.

Housing Stocks That Warrant a Look

Some other housing stocks worth a look are NVR Inc. (NVR - Snapshot Report) - Zacks Rank #1 (Strong Buy), DR Horton Inc.(DHI - Analyst Report) - Zacks Rank #2 (Buy), and Ryland Group Inc. (RYL - Snapshot Report) - Zacks Rank #2 (Buy)

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
FELCOR LODG… FCH 10.47 +3.46%
OLD DOMINIO… ODFL 63.48 +1.18%
VASCO DATA… VDSI 13.57 +0.67%
AMEDISYS IN… AMED 20.18 +0.10%
LENOVO GROU… LNVGY 27.07 +0.04%