Lennar Corporation Stock Buy Recommendation Reiterated (LEN)

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 and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • LEN's very impressive revenue growth greatly exceeded the industry average of 11.3%. Since the same quarter one year prior, revenues leaped by 53.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • LENNAR CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings 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 38.4% in earnings ($1.91 versus $3.10).
  • The gross profit margin for LENNAR CORP is rather low; currently it is at 23.56%. Regardless of LEN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, LEN's net profit margin of 9.63% compares favorably to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Household Durables industry. The net income has significantly decreased by 69.6% when compared to the same quarter one year ago, falling from $452.70 million to $137.44 million.

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 $5.3 billion and is part of the industrial goods sector and materials & construction industry. Shares are down 9.5% year to date as of the close of trading on Tuesday.

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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