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Lennar Corporation Stock Buy Recommendation Reiterated (LEN)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Lennar Corporation (NYSE:LEN) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, compelling growth in net income, notable return on equity and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

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Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 23.6%. Since the same quarter one year prior, revenues rose by 36.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 225.00% and other important driving factors, this stock has surged by 46.51% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Household Durables industry and the overall market, LENNAR CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Durables industry. The net income increased by 284.1% when compared to the same quarter one year prior, rising from $14.97 million to $57.49 million.
  • LENNAR CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, LENNAR CORP increased its bottom line by earning $3.10 versus $0.48 in the prior year. For the next year, the market is expecting a contraction of 46.8% in earnings ($1.65 versus $3.10).

Lennar Corporation, together with its subsidiaries, engages in homebuilding, financial services, and real estate businesses in the United States. Lennar has a market cap of $6.9 billion and is part of the industrial goods sector and materials & construction industry. The company has a P/E ratio of 13.00, below the S&P 500 P/E ratio of 18.00. Shares are up 10.4% year to date as of the close of trading on Monday.

You can view the full Lennar Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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