Lennar (LEN) Laps the Stock Market: Here's Why

Lennar (LEN) ended the recent trading session at $121.55, demonstrating a +1.01% change from the preceding day's closing price. The stock outperformed the S&P 500, which registered a daily gain of 0.13%. At the same time, the Dow added 0.16%, and the tech-heavy Nasdaq lost 0.22%.

Coming into today, shares of the homebuilder had gained 2.05% in the past month. In that same time, the Construction sector lost 2.77%, while the S&P 500 lost 0.2%.

The investment community will be paying close attention to the earnings performance of Lennar in its upcoming release. The company is predicted to post an EPS of $2.3, indicating a 42.93% decline compared to the equivalent quarter last year. Simultaneously, our latest consensus estimate expects the revenue to be $9.15 billion, showing a 7.97% drop compared to the year-ago quarter.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $8.25 per share and revenue of $33.96 billion, indicating changes of -40.48% and -4.18%, respectively, compared to the previous year.

Investors should also pay attention to any latest changes in analyst estimates for Lennar. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 3.82% downward. At present, Lennar boasts a Zacks Rank of #5 (Strong Sell).

Digging into valuation, Lennar currently has a Forward P/E ratio of 14.59. This denotes a premium relative to the industry average Forward P/E of 11.44.

One should further note that LEN currently holds a PEG ratio of 5.6. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. The Building Products - Home Builders was holding an average PEG ratio of 1.72 at yesterday's closing price.

The Building Products - Home Builders industry is part of the Construction sector. This group has a Zacks Industry Rank of 205, putting it in the bottom 18% of all 250+ industries.

Story Continues

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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