Yahoo Finance Does Lennar Corporation's (NYSE:LEN) 9.0% Earnings Growth Reflect The Long-Term Trend?
When Lennar Corporation (NYSE:LEN) announced its most recent earnings (30 November 2019), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Lennar performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see LEN has performed.
See our latest analysis for Lennar
How LEN fared against its long-term earnings performance and its industry
LEN's trailing twelve-month earnings (from 30 November 2019) of US$1.8b has increased by 9.0% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 23%, indicating the rate at which LEN is growing has slowed down. To understand what's happening, let's examine what's occurring with margins and if the rest of the industry is facing the same headwind.
In terms of returns from investment, Lennar has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 6.3% is below the US Consumer Durables industry of 7.4%, indicating Lennar's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Lennar’s debt level, has increased over the past 3 years from 8.9% to 9.9%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 114% to 60% over the past 5 years.
What does this mean?
Though Lennar's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Lennar to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for LEN’s future growth? Take a look at our free research report of analyst consensus for LEN’s outlook.
Financial Health: Are LEN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 November 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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