Lennar Corp (LEN, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $116.89, Lennar Corp has witnessed a daily gain of 1.86%, marked against a three-month change of -2.35%. A thorough analysis, underlined by the GuruFocus Score Rating, suggests that Lennar Corp is well-positioned for substantial growth in the near future.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Here is a breakdown of Lennar Corp's GF Score:
- Financial strength rank: 7/10
- Profitability rank: 9/10
- Growth rank: 10/10
- GF Value rank: 5/10
- Momentum rank: 6/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, and moderate ranks in GF value and momentum, GuruFocus assigned Lennar Corp the GF Score of 93 out of 100, which signals the highest outperformance potential.
Understanding Lennar Corp's Business
Lennar Corp, with a market cap of $33.14 billion and sales of $33.44 billion, is the second-largest public homebuilder in the United States based on the number of delivered homes. The company's homebuilding operations target first-time, move-up, and active adult homebuyers mainly under the Lennar brand name. Lennar's financial-services segment provides mortgage financing and related services to its homebuyers. Miami-based Lennar is also involved in multifamily construction and has invested in numerous housing-related technology startups. The company's operating margin stands at 17.43%.
Financial Strength Breakdown
According to the Financial Strength rating, Lennar Corp's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. With a favorable Debt-to-Revenue ratio of 0.15, Lennar Corp's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Lennar Corp's impressive standing among its peers in generating profit. Lennar Corp's Operating Margin has increased (108.37%) over the past five years, as shown by the following data: 2018: 9.68; 2019: 11.15; 2020: 13.97; 2021: 18.94; 2022: 20.16. Furthermore, Lennar Corp's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2018: 11.35; 2019: 12.59; 2020: 15.45; 2021: 20.41; 2022: 21.39. This trend underscores the company's growing proficiency in transforming revenue into profit. Lennar Corp's strong Predictability Rank of 4.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Lennar Corp demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 18.5%, which outperforms better than 76.24% of 101 companies in the Homebuilding & Construction industry. Moreover, Lennar Corp has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 43.2, and the rate over the past five years is 31.5. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given Lennar Corp's strong financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health, consistent profitability, and impressive growth trajectory, making it a compelling investment opportunity. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
