Lennar to Beat Earnings Estimates; Stock Has Over 20% Upside Potential

Lennar Corp, a home construction and real estate company, is expected to report a profit of $1.71 per share in the fiscal first quarter, which represents year-over-year growth of about 35% from $1.27 per share seen in the same quarter a year ago.

Miami, Florida-based company would post year-over-year revenue growth of about 14% to around $5.1 billion. In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 35%.

According to ZACKS research, on average equity analysts forecast that the real estate company will report full-year earnings of $9.14 per share for this fiscal year, with EPS estimates ranging from $7.97 to $9.60. For the next year, analysts forecast that the company will report earnings of $9.51 per share, with EPS estimates ranging from $8.39 to $10.35.

Lennar shares, which surged over 35% in 2020, rose about 15% so far this year. At the time of writing, the stock traded 0.6% lower at $87.46 on Monday.

Analyst Comments

“Shares of Lennar have outperformed the industry in the past six months. The company is benefiting from effective cost control and focus on making its homebuilding platform more efficient, which in turn resulted in higher operating leverage. Higher demand for new homes backed by declining mortgage rates and low inventory levels bodes well. Focus on the lighter land strategy to boost free cash flow will bolster the balance sheet and thereby drive returns,” said equity analysts at ZACKS Research.

“Moreover, solid first quarter 2021 guidance indicates margin expansion and deliveries to increase significantly. Also, earnings estimates for 2021 have increased over the past 30 days. However, higher land, labour and material costs are concerning. This may exert pressure on the company’s upcoming quarters as well.”

Lennar Stock Price Forecast

Ten analysts who offered stock ratings for Lennar in the last three months forecast the average price in 12 months of $97.40 with a high forecast of $109.00 and a low forecast of $90.00.

The average price target represents an 11.15% increase from the last price of $87.63. Of those ten analysts, seven rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Several other analysts have also updated their stock outlook. Wedbush raised the price target to $102 from $88. UBS increased the price target to $83 from $77. BTIG Research raised their price target on shares to $104 from $99 and gave the stock a “buy” rating. Bank of America lifted their target price to $97 from $87. Argus lifted their target price to $100 from $88 and gave the stock a “buy” rating.

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