Why Lennar (LEN) Stock Is Lower Today

NEW YORK (TheStreet) -- Shares of Lennar Corp.  (LEN) are down -0.41% to $41.15 in early trading on Friday after Sterne Agee reduced its 12-month price target to $38.00 from $40.00, while maintaining its "neutral" rating.

While the firm's fiscal year 2014 earnings per share estimate is unchanged at $2.50, it lowered the fiscal third quarter 2014 earnings per share estimate to 65 cents from 80 cents.

Sterne Agee also cut its fiscal year 2015 earnings per share to $2.93 from $3.20, and initiated fiscal year 2016 earnings per share of $2.66.

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TheStreet Ratings team rates LENNAR CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate LENNAR CORP (LEN) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, increase in stock price during the past year and growth in earnings per share. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 17.5%. Since the same quarter one year prior, revenues rose by 37.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Household Durables industry average. The net income increased by 35.9% when compared to the same quarter one year prior, rising from $57.49 million to $78.12 million.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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 improved earnings per share by 34.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LENNAR CORP reported lower earnings of $2.14 versus $3.10 in the prior year. This year, the market expects an improvement in earnings ($2.50 versus $2.14).
  • The gross profit margin for LENNAR CORP is rather low; currently it is at 22.26%. 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 5.75% compares favorably to the industry average.
  • You can view the full analysis from the report here: LEN Ratings Report
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