Lennar's (LEN, Financial) sales continue to gain from the robust execution of its futuristic product strategy. The sales of its multigenerational brand added to 275 sales during the recent quarter and expanded by 24% on a year-over-year basis. At present, Lennar offers extended plans in 208 communities throughout the country, and the average sales price for next-gen increased by nearly 34% above the company’s average during the third quarter.
Lennar’s financial services segment complements its homebuilding operations. The financial services and homebuilding divisions are the key drivers of short-term earnings and revenue. In addition, Lennar’s three other operating divisions are performing excellently and successfully creating value platforms in a long run.
Lennar sold a total of 580 apartments in two apartment communities. These sales exceeded the company’s twice the cash multiple and forecast a 25% return on invested capital. These excellent sales figures highlight the company’s earnings potential with the development of its geographically diversified $5 billion pipeline, going forward.
TheStreet Ratings team rates Lennar Corp a Buy with a ratings score of B owing to several strengths that are believed to outweigh any of the company’s weaknesses. The company's strengths are viewed in several areas, like its solid revenue growth, rise in stock price performance for last year, expansion of net income and impressive return on equity. Contrastingly, the company’s only weakness is its overall higher debt management risk.
Ratios and conclusion
The trailing P/E and forward P/E ratios of 16.23 and 12.19 means that it is aggressively reducing costs to increase margin performance. Also, it’s better than the industry’s average P/E of 17.73. The PEG ratio of 1.04, above 1 depicts slower growth compared to the solid industry’s average of 0.84. The profit margin of 7.84% is satisfactory. The revenue per share and diluted EPS of 35.65 and 2.46 respectively indicate solid shareholder earnings.
The quarterly revenue and earnings growth of 25.70% and 47.30% is impressive and represent healthy growth in investor earnings. However, there are huge debt levels on the company’s balance sheet which is concerning. Finally, the investors are advised to cautiously invest into Lennar looking at the robust long-term growth prospects as pointed out by an annual growth of 14.30% a year for the coming five years, which is comparable to the industry’s average of 16.19% and expect promising returns in a long run.
