tiprankstipranks
Trending News
More News >
Lennar (LEN)
NYSE:LEN

Lennar (LEN) AI Stock Analysis

Compare
2,178 Followers

Top Page

LE

Lennar

(NYSE:LEN)

Rating:70Outperform
Price Target:
$121.00
▲(9.94%Upside)
Lennar's overall stock score is driven by its solid financial performance and strategic corporate events, which demonstrate financial stability and growth potential. However, technical indicators and mixed earnings call sentiment highlight challenges such as market conditions and margin pressure. The undervaluation provides potential upside for investors.
Positive Factors
Earnings
Lennar Corporation's normalized EPS of $2.14 beat expectations, indicating strong financial performance.
Financial Strategy
Lennar is better positioned for earnings growth due to its underleveraged balance sheet and reset margin profile.
Operational Efficiency
LEN platform provides significant scale, low leverage, and is getting closer to the efficient machine management is looking to achieve long term.
Negative Factors
Market Conditions
Consumer affordability headwinds are clouding the outlook and bringing numbers down.
Profitability Challenges
Gross margin missed expectations and the guidance for the upcoming quarter is lower, reflecting challenges in maintaining profitability.
Sales Strategy
Lennar's strategy to maintain and incentivize volume is expected to keep their profitability at dramatically depressed levels.

Lennar (LEN) vs. SPDR S&P 500 ETF (SPY)

Lennar Business Overview & Revenue Model

Company DescriptionLennar Corporation, together with its subsidiaries, operates as a homebuilder primarily under the Lennar brand in the United States. It operates through Homebuilding East, Homebuilding Central, Homebuilding Texas, Homebuilding West, Financial Services, Multifamily, and Lennar Other segments. The company's homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development, and sale of residential land; and development, construction, and management of multifamily rental properties. It also offers residential mortgage financing, title insurance, and closing services for home buyers and others, as well as originates and sells securitization commercial mortgage loans. In addition, the company is involved in the fund investment activity. It primarily serves first-time, move-up, active adult, and luxury homebuyers. Lennar Corporation was founded in 1954 and is based in Miami, Florida.
How the Company Makes MoneyLennar primarily generates its revenue through its Homebuilding segment, which involves the sale of residential homes. This segment includes the acquisition, development, and sale of land and residential properties. The company also earns income from its Lennar Financial Services segment by providing mortgage financing, title insurance, and closing services to its homebuyers, further enhancing the home purchasing process. Additionally, Lennar's Multifamily segment contributes to its revenue by developing, constructing, and managing multifamily rental properties. Strategic partnerships with suppliers and contractors, along with Lennar's focus on operational efficiency, also play a crucial role in optimizing costs and maximizing profitability across its various revenue streams.

Lennar Key Performance Indicators (KPIs)

Any
Any
EBIT by Segment
EBIT by Segment
Examines earnings before interest and taxes across various segments, providing insight into operational efficiency and profitability within each area of the business.
Chart InsightsLennar's Homebuilding EBIT shows fluctuations with a recent decline, reflecting market challenges and margin pressures highlighted in the earnings call. Despite strong strategic moves like the Millrose spin-off and Rausch Coleman acquisition, the company faces decreased gross margins due to increased sales incentives. Financial Services EBIT remains stable, aligning with projected earnings of $135M-$145M. Multifamily EBIT experienced volatility but shows potential recovery. Lennar's asset-light strategy and focus on operational efficiency are crucial as they navigate affordability challenges and high mortgage rates impacting the housing market.
Data provided by:Main Street Data

Lennar Earnings Call Summary

Earnings Call Date:Mar 20, 2025
(Q1-2025)
|
% Change Since: -7.91%|
Next Earnings Date:Jun 24, 2025
Earnings Call Sentiment Neutral
Lennar's earnings call reflects a mixed sentiment with strong strategic moves such as the Millrose spin-off and Rausch Coleman acquisition being overshadowed by the challenging macroeconomic environment, decreased gross margins, and continued margin pressure.
Q1-2025 Updates
Positive Updates
Strong Cash Position and Liquidity
Lennar ended the quarter with $2.3 billion in cash and no borrowings on a $3 billion revolving credit facility, providing total liquidity of approximately $5.3 billion.
Completion of Millrose Spin-off
Successfully spun off $5.6 billion of land representing 87,000 home sites and $1 billion of cash, marking a significant step in the asset-light strategy.
Rausch Coleman Acquisition
Lennar completed the acquisition of Rausch Coleman Homes, expanding its footprint into both new and existing markets.
Improvements in Direct Construction Costs
Direct construction costs decreased by 2.5% year-over-year to the lowest since Q3 of 2021, with expectations for continued reductions.
Negative Updates
Decreased Gross Margin
Gross margin reduced to 18.7% due to increased sales incentives rising to approximately 13%, significantly above the normal 5-6% level.
Challenging Housing Market Conditions
The macroeconomy remains challenging with high mortgage interest rates leading to a weaker housing market and limited actionable demand.
Continued Margin Pressure
Expected gross margins of approximately 18% in Q2, indicating continued pressure on profitability due to the current market conditions.
Company Guidance
During Lennar's first quarter earnings call for fiscal year 2025, the company provided limited guidance for the second quarter. They expect to sell between 22,500 and 23,500 homes and deliver between 19,500 and 20,500 homes, with an anticipated gross margin of approximately 18%, reflecting continued margin pressure due to market conditions. The average sales price for Q2 is projected to be between $390,000 to $400,000 as they aim to meet affordability challenges. Sales incentives have risen to about 13%, affecting the gross margin, which was 18.7% in Q1. The company maintains a focus on turning inventory into cash and anticipates that SG&A will be in the range of 8% to 8.2%. Financial services earnings are projected to be between $135 million and $145 million. Lennar remains committed to an asset-light, land-light strategy, aiming to deliver consistent volume and maximize operational efficiencies.

Lennar Financial Statement Overview

Summary
Lennar exhibits solid financial performance with consistent revenue growth and strong margins. The conservative debt management and effective cash flow operations underscore its financial health. However, the recent absence of stockholders' equity in TTM data introduces a reporting anomaly that warrants attention. Despite this, Lennar's financial statements reflect a stable and profitable business with a strong operational foundation.
Income Statement
75
Positive
Lennar's income statement shows a stable trajectory with consistent revenue growth, evidenced by a 6.2% increase from 2023 to 2024. Gross profit margin stands strong, indicating effective cost management. Although there is a slight decline in net income from 2024 to TTM (Trailing-Twelve-Months), the company maintains healthy profitability with solid EBIT and EBITDA margins. The net profit margin remains robust, reflecting strong bottom-line performance.
Balance Sheet
68
Positive
The balance sheet reveals a conservative financial position with zero total debt in the TTM period, suggesting strong financial stability. However, the absence of stockholders' equity in the TTM data raises concerns about reporting consistency. Historically, the debt-to-equity ratio has been improving, and the equity ratio indicates a solid capital structure, though recent data limitations prevent full analysis.
Cash Flow
80
Positive
Lennar demonstrates strong cash flow management with positive operating cash flow and free cash flow figures in TTM. Although there is a decline in free cash flow from 2023 to TTM, the company efficiently covers its net income with operating cash flow, highlighting effective cash conversion. The free cash flow to net income ratio remains positive, indicating adequate cash generation to support operations.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
35.76B35.44B34.23B33.67B27.13B22.49B
Gross Profit
5.28B5.50B8.17B10.47B6.28B3.48B
EBIT
4.65B4.85B5.44B7.46B5.79B3.03B
EBITDA
4.73B4.97B5.55B7.55B5.88B3.12B
Net Income Common Stockholders
3.73B3.93B3.94B4.61B4.43B2.47B
Balance SheetCash, Cash Equivalents and Short-Term Investments
2.56B4.95B6.51B6.37B2.75B2.75B
Total Assets
34.99B41.31B39.23B37.98B33.21B29.94B
Total Debt
3.61B2.26B4.98B4.06B4.65B5.96B
Net Debt
1.09B-720.42M-1.49B-575.30M1.90B3.21B
Total Liabilities
12.12B13.29B12.53B13.74B12.21B11.84B
Stockholders Equity
22.87B27.87B26.58B24.10B20.82B17.99B
Cash FlowFree Cash Flow
1.59B2.23B5.08B3.21B2.47B4.12B
Operating Cash Flow
1.75B2.40B5.18B3.27B2.53B4.19B
Investing Cash Flow
-133.15M-302.56M-176.98M-128.30M-105.09M-280.20M
Financing Cash Flow
-4.29B-3.68B-3.25B-1.28B-2.40B-2.45B

Lennar Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price110.06
Price Trends
50DMA
108.42
Positive
100DMA
116.35
Negative
200DMA
139.17
Negative
Market Momentum
MACD
-0.39
Negative
RSI
54.28
Neutral
STOCH
82.41
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LEN, the sentiment is Neutral. The current price of 110.06 is above the 20-day moving average (MA) of 108.38, above the 50-day MA of 108.42, and below the 200-day MA of 139.17, indicating a neutral trend. The MACD of -0.39 indicates Negative momentum. The RSI at 54.28 is Neutral, neither overbought nor oversold. The STOCH value of 82.41 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for LEN.

Lennar Risk Analysis

Lennar disclosed 51 risk factors in its most recent earnings report. Lennar reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
The trading price for our Class A common stock and our Class B common stock may continue to be volatile. Q4, 2024
2.
If the planned Millrose Spin-Off is completed, we may lose access to the land or homesites we would contribute to Millrose or that Millrose acquires in the future pursuant to our specifications in the event of lender foreclosures or bankruptcy proceedings. Q4, 2024
3.
The Millrose Spin-Off of much of our land assets may not occur on the timeline we expect or at all and we may not realize some or all of the expected benefits from this transaction even if completed. Q4, 2024

Lennar Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TOTOL
82
Outperform
$10.36B7.8218.09%0.87%1.59%-8.04%
PHPHM
78
Outperform
$19.78B6.9625.52%0.82%8.86%13.60%
DHDHI
77
Outperform
$36.35B8.9617.83%1.21%-4.71%-10.19%
NVNVR
76
Outperform
$21.08B14.8038.25%8.81%1.79%
75
Outperform
$5.68B6.7315.97%12.19%23.15%
LELEN
70
Outperform
$28.95B8.0114.97%1.81%2.03%-3.80%
62
Neutral
$6.94B11.292.95%3.87%2.70%-24.49%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
LEN
Lennar
110.06
-35.80
-24.54%
DHI
DR Horton
122.74
-16.50
-11.85%
NVR
NVR
7,194.47
-303.20
-4.04%
PHM
PulteGroup
101.64
-9.10
-8.22%
TOL
Toll Brothers
108.65
-7.49
-6.45%
TMHC
Taylor Morrison
58.09
2.57
4.63%

Lennar Corporate Events

Private Placements and FinancingBusiness Operations and Strategy
Lennar Settles $700 Million Senior Notes Offering
Positive
May 19, 2025

On May 14, 2025, Lennar Corporation entered into a delayed draw term loan credit agreement, allowing for loans up to $1.61 billion, with an option to increase by $500 million. This agreement involves major financial institutions and is intended for working capital and general corporate purposes. Additionally, on May 19, 2025, Lennar settled a $700 million offering of 5.200% Senior Notes due 2030, guaranteed by its subsidiaries. The proceeds are earmarked for general corporate purposes, including debt repayment, enhancing the company’s financial flexibility.

The most recent analyst rating on (LEN) stock is a Hold with a $164.00 price target. To see the full list of analyst forecasts on Lennar stock, see the LEN Stock Forecast page.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.