LEN could have potential as a great value stock
Homebuilding giant Lennar Corporation (NYSE:LEN) will release third quarter earnings after the market closes on Monday, Sept. 20. Ahead of the event, options traders are bracing for a slightly bigger-than-usual move. Given the real estate boom the last 18 months, investors will be curious as to how the company fares in the earnings confessional.
Lennar has a history of positive post-earnings reactions, with seven of the last eight reports resulting in moves to the upside. This includes a 13.8% bull gap back in March, and a 3.6% rise back in June. Overall, LEN averages a post-earnings move of 4.6% the last two years, regardless of direction. This time around, the options market is pricing in a larger-than-usual move of 5.7%.
Lennar stock is up a comfortable 32% in 2021, with this month's 6% pullback contained by its 160-day moving average. Up 2.3% to trade at $100.72 today, the psychologically-significant round $100 level could emerge as a new floor, especially considering above sits LEN's May 10 record high of $110.61.
From a fundamental perspective, Lennar stock is an amazing value investment, with aa forward dividend of $1.00 and a dividend yield of 1.01%. Lennar stock currently trades at a very attractive price-earnings ratio of 9.13 and LEN has an even better forward price-earnings ratio of 8.00, signaling expected growth over the coming year.
In addition, Lennar Corporation has experienced strong and consistent revenue growth and net income growth over the past few years. Lennar’s revenues are currently up 93% and net income has grown 316% since fiscal 2017. Furthermore, LEN has grown revenue by 9% and net income by 37% since reporting financial results for the full year of fiscal 2020. Overall, there aren’t many fundamental negatives for Lennar stock other than a somewhat average balance sheet containing $2.6 billion in cash and $6.99 billion in debt.