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Lennar (LEN) Soars to 52-Week High, Time to Cash Out?
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Have you been paying attention to shares of Lennar (LEN - Free Report) ? Shares have been on the move with the stock up 7.7% over the past month. The stock hit a new 52-week high of $114.67 in the previous session. Lennar has gained 47.3% since the start of the year compared to the 26.2% move for the Zacks Construction sector and the 30.7% return for the Zacks Building Products - Home Builders industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on September 20, 2021, Lennar reported EPS of $3.27 versus consensus estimate of $3.24 while it missed the consensus revenue estimate by 4.51%.
For the current fiscal year, Lennar is expected to post earnings of $15 per share on $27.2 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $16.69 per share on $32.35 billion in revenues. This represents a year-over-year change of 7.05% and 18.93%, respectively.
Valuation Metrics
Lennar may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Lennar has a Value Score of A. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 7.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 14.1X versus its peer group's average of 10.6X. Additionally, the stock has a PEG ratio of 0.32. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Lennar currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Lennar passes the test. Thus, it seems as though Lennar shares could have a bit more room to run in the near term.
How Does Lennar Stack Up to the Competition?
Shares of Lennar have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Tri Pointe Homes (TPH - Free Report) , KB Home (KBH - Free Report) , and Toll Brothers (TOL - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 21% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Lennar, even beyond its own solid fundamental situation.
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Lennar (LEN) Soars to 52-Week High, Time to Cash Out?
Have you been paying attention to shares of Lennar (LEN - Free Report) ? Shares have been on the move with the stock up 7.7% over the past month. The stock hit a new 52-week high of $114.67 in the previous session. Lennar has gained 47.3% since the start of the year compared to the 26.2% move for the Zacks Construction sector and the 30.7% return for the Zacks Building Products - Home Builders industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on September 20, 2021, Lennar reported EPS of $3.27 versus consensus estimate of $3.24 while it missed the consensus revenue estimate by 4.51%.
For the current fiscal year, Lennar is expected to post earnings of $15 per share on $27.2 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $16.69 per share on $32.35 billion in revenues. This represents a year-over-year change of 7.05% and 18.93%, respectively.
Valuation Metrics
Lennar may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Lennar has a Value Score of A. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 7.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 14.1X versus its peer group's average of 10.6X. Additionally, the stock has a PEG ratio of 0.32. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Lennar currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Lennar passes the test. Thus, it seems as though Lennar shares could have a bit more room to run in the near term.
How Does Lennar Stack Up to the Competition?
Shares of Lennar have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Tri Pointe Homes (TPH - Free Report) , KB Home (KBH - Free Report) , and Toll Brothers (TOL - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 21% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Lennar, even beyond its own solid fundamental situation.