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Lennar Corporation (LEN) Hit a 52 Week High, Can the Run Continue?
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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 3% over the past month. The stock hit a new 52-week high of $158.83 in the previous session. Lennar has gained 6.4% since the start of the year compared to the 9.1% move for the Zacks Construction sector and the 4.8% 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 December 14, 2023, Lennar reported EPS of $5.17 versus consensus estimate of $4.64 while it beat the consensus revenue estimate by 6.09%.
For the current fiscal year, Lennar is expected to post earnings of $14.36 per share on $36.09 billion in revenues. This represents a 0.77% change in EPS on a 5.42% change in revenues. For the next fiscal year, the company is expected to earn $15.92 per share on $38.23 billion in revenues. This represents a year-over-year change of 10.87% and 5.94%, 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. The idea behind the style scores is to help investors 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 A and F, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 11X current fiscal year EPS estimates, which is a premium to the peer industry average of 9.2X. On a trailing cash flow basis, the stock currently trades at 10.6X versus its peer group's average of 8.5X. Additionally, the stock has a PEG ratio of 2.07. 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 favorable earnings estimate revisions from covering analysts.
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 LEN Stack Up to the Competition?
Shares of LEN have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is KB Home (KBH - Free Report) . KBH has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. KB Home beat our consensus estimate by 9.47%, and for the current fiscal year, KBH is expected to post earnings of $7.59 per share on revenue of $6.69 billion.
Shares of KB Home have gained 9.2% over the past month, and currently trade at a forward P/E of 8.76X and a P/CF of 8.36X.
The Building Products - Home Builders industry is in the top 10% of all the industries we have in our universe, so it looks like there are some nice tailwinds for LEN and KBH, even beyond their own solid fundamental situation.
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Lennar Corporation (LEN) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Lennar (LEN - Free Report) ? Shares have been on the move with the stock up 3% over the past month. The stock hit a new 52-week high of $158.83 in the previous session. Lennar has gained 6.4% since the start of the year compared to the 9.1% move for the Zacks Construction sector and the 4.8% 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 December 14, 2023, Lennar reported EPS of $5.17 versus consensus estimate of $4.64 while it beat the consensus revenue estimate by 6.09%.
For the current fiscal year, Lennar is expected to post earnings of $14.36 per share on $36.09 billion in revenues. This represents a 0.77% change in EPS on a 5.42% change in revenues. For the next fiscal year, the company is expected to earn $15.92 per share on $38.23 billion in revenues. This represents a year-over-year change of 10.87% and 5.94%, 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. The idea behind the style scores is to help investors 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 A and F, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 11X current fiscal year EPS estimates, which is a premium to the peer industry average of 9.2X. On a trailing cash flow basis, the stock currently trades at 10.6X versus its peer group's average of 8.5X. Additionally, the stock has a PEG ratio of 2.07. 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 favorable earnings estimate revisions from covering analysts.
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 LEN Stack Up to the Competition?
Shares of LEN have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is KB Home (KBH - Free Report) . KBH has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. KB Home beat our consensus estimate by 9.47%, and for the current fiscal year, KBH is expected to post earnings of $7.59 per share on revenue of $6.69 billion.
Shares of KB Home have gained 9.2% over the past month, and currently trade at a forward P/E of 8.76X and a P/CF of 8.36X.
The Building Products - Home Builders industry is in the top 10% of all the industries we have in our universe, so it looks like there are some nice tailwinds for LEN and KBH, even beyond their own solid fundamental situation.