Lennar (LEN) AI Stock Analysis

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Lennar

(NYSE:LEN)

67Neutral

Lennar's solid financial performance and attractive valuation are key strengths, providing a strong foundation despite current market challenges. The bearish technical indicators and margin pressures from the earnings call suggest caution. Overall, Lennar maintains stability with its strategic initiatives and financial health, but faces headwinds from the challenging housing market and reduced gross margins.

Positive Factors

Earnings

Lennar Corporation's normalized EPS of $2.14 beat expectations, indicating strong financial performance.

Financial Strategy

The company repurchased approximately $703 million of stock, which was significantly above the forecasted $200 million.

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

Guidance for gross margin missed expectation by approximately 160bps.

Sales Strategy

Management commentary suggests a weak Spring selling season thus far, with waning consumer confidence now combining with pinched affordability to force continued aggressive sales incentives to maintain sales volume.

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

Market Cap

$28.36B

Dividend Yield1.84%

Average Volume (3M)3.30M

Price to Earnings (P/E)7.9

Beta (1Y)0.91

Revenue Growth2.03%

EPS Growth-3.80%

CountryUS

Employees13,265

SectorConsumer Cyclical

Sector Strength63

IndustryResidential Construction

Share Statistics

EPS (TTM)13.73

Shares Outstanding232,184,460

10 Day Avg. Volume1,975,562

30 Day Avg. Volume3,296,403

Financial Highlights & Ratios

PEG Ratio1.96

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.16

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit4.08

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$128.92

Price Target Upside19.16% Upside

Rating ConsensusHold

Number of Analyst Covering14

Lennar Business Overview & Revenue Model

Company DescriptionLennar Corporation is one of the leading homebuilders in the United States, operating primarily in the residential construction sector. Founded in 1954 and headquartered in Miami, Florida, Lennar is engaged in the construction and sale of single-family homes, townhomes, and condominiums, catering to first-time, move-up, and active adult homebuyers. The company also provides financial services and operates through various subsidiaries, offering mortgage financing, title insurance, and closing services.

How the Company Makes MoneyLennar Corporation generates revenue primarily through the sale of residential properties, including single-family homes, townhomes, and condominiums. The company's homebuilding operations are the largest contributor to its revenue, with earnings driven by the number of homes sold and the average selling price. Additionally, Lennar offers financial services, including mortgage financing, title insurance, and closing services, which supplement its core homebuilding income. Strategic partnerships and joint ventures in land acquisition and development also play a crucial role in enhancing Lennar's earnings. The company's ability to navigate market conditions, manage construction costs, and secure favorable land positions are significant factors influencing its financial performance.

Lennar Key Performance Indicators (KPIs)

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 a recovery trend in 2023 after a dip in early 2023, aligning with strategic moves like the Millrose spin-off and Rausch Coleman acquisition. However, the Multifamily segment experienced significant volatility, with a notable rebound in late 2024. Financial Services EBIT is projected to stabilize, reflecting management's focus on operational efficiencies despite margin pressures. The earnings call highlights challenges from high mortgage rates and decreased gross margins, but Lennar's asset-light strategy and liquidity position provide resilience against market headwinds.

Data provided by:

Main Street Data

Lennar Financial Statement Overview

Summary

Lennar displays strong financial health with consistent revenue growth and profitability. The balance sheet is solid with low leverage, but cash flow management could be enhanced. Overall, the company is well-positioned in the residential construction industry, although attention to cash flow consistency is advisable.

Income Statement

Very Positive

Lennar has demonstrated strong revenue growth, with a solid increase from the previous year. The gross profit and net profit margins remain robust, indicating efficient cost management. While there was a slight decline in EBIT and EBITDA margins compared to the previous year, profitability remains strong overall.

Balance Sheet

Positive

The company maintains a healthy balance sheet with a solid equity base. The debt-to-equity ratio is low, reflecting prudent financial management and low leverage. Return on equity has slightly decreased but remains strong, indicating effective utilization of shareholder funds.

Cash Flow

Positive

Lennar's cash flow management appears stable, though there is room for improvement. Operating cash flow has been inconsistent, with a significant decrease in the latest period. The lack of free cash flow data for the latest period limits a comprehensive evaluation.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
35.44B	34.23B	33.67B	27.13B	22.49B
	Gross Profit
8.06B	8.17B	10.47B	6.28B	3.48B
	EBIT
4.93B	5.44B	7.46B	5.79B	3.03B
	EBITDA
5.16B	5.55B	7.55B	5.88B	3.12B
	Net Income Common Stockholders
3.93B	3.94B	4.61B	4.43B	2.47B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
8.29B	6.51B	6.37B	2.75B	2.75B
	Total Assets
41.31B	39.23B	37.98B	33.21B	29.94B
	Total Debt
2.26B	4.98B	4.06B	4.65B	5.96B
	Net Debt
-2.40B	-1.49B	-575.30M	1.90B	3.21B
	Total Liabilities
13.29B	12.53B	13.74B	12.21B	11.84B
	Stockholders Equity
27.87B	26.58B	24.10B	20.82B	17.99B
Cash Flow		Free Cash Flow
2.23B	5.08B	3.21B	2.47B	4.12B
	Operating Cash Flow
2.40B	5.18B	3.27B	2.53B	4.19B
	Investing Cash Flow
-302.56M	-176.98M	-128.30M	-105.09M	-280.20M
	Financing Cash Flow
-3.68B	-3.25B	-1.28B	-2.40B	-2.45B

Lennar Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price108.19

Price Trends

50DMA

114.13

Negative

100DMA

123.98

Negative

200DMA

145.97

Negative

Market Momentum

MACD

-1.90

Negative

RSI

48.02

Neutral

STOCH

63.19

Neutral

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 108.19 is above the 20-day moving average (MA) of 106.78, below the 50-day MA of 114.13, and below the 200-day MA of 145.97, indicating a neutral trend. The MACD of -1.90 indicates Negative momentum. The RSI at 48.02 is Neutral, neither overbought nor oversold. The STOCH value of 63.19 is Neutral, 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 0 New Risks

Lennar Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DHI	78 Outperform	$37.75B	8.46	17.83%	1.11%	-4.71%	-10.19%
PHM	78 Outperform	$20.56B	7.24	25.52%	0.82%	8.86%	13.60%
TMHC	77 Outperform	$5.76B	6.67	15.97%	―	12.19%	23.15%
TOL	75 Outperform	$10.03B	6.94	20.38%	0.92%	5.86%	12.20%
NVR	74 Outperform	$21.16B	14.66	38.25%	―	9.55%	1.79%
LEN	67 Neutral	$28.36B	7.88	14.97%	1.84%	2.03%	-3.80%
Sector *	61 Neutral	$6.55B	11.72	3.07%	4.01%	2.66%	-21.27%

* Consumer Cyclical Sector Average

Performance Comparison

LEN

Lennar

108.19

-41.53

-27.74%

DHI

DR Horton

125.55

-21.89

-14.85%

NVR

7,034.89

-551.66

-7.27%

PHM

PulteGroup

101.89

-13.91

-12.01%

TOL

Toll Brothers

101.18

-21.45

-17.49%

TMHC

Taylor Morrison

57.44

0.24

0.42%

Lennar Earnings Call Summary

Earnings Call Date:Mar 20, 2025

(Q1-2025)

% Change Since: -9.47%|

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 Corporate Events

Delistings and Listing ChangesM&A TransactionsBusiness Operations and Strategy

Lennar Completes Spin-off of Millrose Properties

Neutral

Feb 7, 2025

On February 7, 2025, Lennar Corporation completed the spin-off of Millrose Properties, distributing 80% of its shares to Lennar stockholders, making Millrose an independent public company listed on the NYSE. This strategic move aligns with Lennar’s shift towards an asset-light, land-light strategy, enhancing its focus on just-in-time home production and strategic flexibility while Millrose aims to facilitate homesite purchases for Lennar and other builders.

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.