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Based in Miami, Florida, Lennar Corporation (LEN) is a leading homebuilder in the United States with a market cap of $41.5 billion. Specializing in the construction and sale of single-family homes, Lennar also engages in multifamily property development and provides a range of financial services.
Companies valued at $10 billion or more are generally labeled as “large-cap” stocks, and Lennar fits this criterion perfectly. Lennar distinguishes itself as the second-largest homebuilder in the U.S., known for its wide geographic presence, significant investments in rental properties, and innovative integration of property technology.
Despite its strong market position, Lennar has experienced a decline of 13.7% from its 52-week high of $172.59, reached in March. Shares of LEN have declined 10% over the past three months, significantly underperforming the broader Nasdaq Composite's ($NASX) 9.1% gains over the same time frame.
Longer term, LEN is marginally down on a YTD basis, lagging behind the NASX's 18.6% gains. Moreover, shares of Lennar have gained 23% over the past 52 weeks, compared to NASX's 33.5% return over the same time frame.
Since November last year, LEN has consistently traded above its 200-day moving average and has remained mostly above its 50-day moving average during this period despite fluctuations in the last few months, indicating a strong bullish trend.
LEN has been underperforming due to mixed earnings results, concerns over rising mortgage rates affecting housing demand, and broader economic uncertainties impacting the housing market. Moreover, despite reporting better-than-expected Q2 earnings on June 17, the stock fell nearly 5% in the next trading session. The decline was primarily attributed to the company's forecast of Q3 home deliveries below analysts' estimates, reflecting concerns over subdued homebuyer demand amidst high mortgage rates and increased sales incentives.
However, its rival, D.R. Horton, Inc. (DHI), has gained 13.8% over the past 52 weeks, underperforming LEN over the same time frame. Plus, on a YTD basis, DHI’s shares have dipped 7.8%, which is a more pronounced decline compared to LEN’s dip.
Despite LEN’s underperformance relative to the broader market, analysts remain cautiously optimistic about its prospects. Among the 18 analysts covering the stock, there is a consensus rating of “Moderate Buy,” and the mean price target of $171.90 suggests a premium of 15.4% to current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
