How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in Lennar (LEN) ten years ago? It may not have been easy to hold on to LEN for all that time, but if you did, how much would your investment be worth today?
Lennar's Business In-Depth
With that in mind, let's take a look at Lennar's main business drivers.
Founded in 1954 and based in Miami, FL, Lennar Corporation is engaged in homebuilding and financial services in the United States. The company’s reportable segments consist of Homebuilding, Lennar Financial Services, Rialto and Lennar Multifamily.
Despite the varied product portfolio, homebuilding remains Lennar’s core business. Homebuilding operations (accounting for 94.9% of fiscal 2022 total revenues) include the sale and construction of single-family attached and detached homes as well as the purchase, development and sale of residential land directly and through unconsolidated entities.
Lennar’s reportable homebuilding segments consist of Homebuilding East, which covers Florida, Georgia, Maryland, New Jersey, North Carolina, South Carolina and Virginia; Homebuilding Central covers Arizona, Colorado and Texas; Homebuilding West covers California and Nevada; Homebuilding Other covers Illinois, Indiana, Minnesota, Oregon, Tennessee, Utah and Washington. However, Homebuilding Other is not considered a reportable segment.
The Financial Services business (2.4%) includes mortgage financing, title insurance and closing services to the company’s homebuyers as well as others through Lennar’s financial services subsidiaries — Universal American Mortgage Company and Eagle Home Mortgage.
Lennar Multi-Family (2.6%) is involved in the development, construction and property management of multi-family rental apartments in premium markets of California through unconsolidated entities.
Lennar & Other (0.1%) includes operations primarily from the company's share of carried interests in Rialto fund investments, retained after the sale of Rialto's asset and investment management platform, along with equity in earnings/loss from Rialto fund investments and strategic technology investments, including other income (expense).
Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in Lennar ten years ago, you're likely feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in April 2013 would be worth $2,703.57, or a 170.36% gain, as of April 4, 2023. Investors should keep in mind that this return excludes dividends but includes price appreciation.
In comparison, the S&P 500 gained 165.47% and the price of gold went up 22.79% over the same time frame.
Analysts are anticipating more upside for LEN.
Lennar’s shares have underperformed the industry in the past six months. The trend is likely to continue as its earnings decreased by 21% year over year in first-quarter fiscal 2023. The gross and net margins on home sales contracted by 570 and 560 basis points (bps), respectively. This was due to increased costs per square foot, thanks to higher materials and labor costs. Land costs also increased year over year. For the fiscal second quarter, the company expects lower deliveries and orders. Also, it projects low margins and high SG&A to put pressure on the bottom line. That said, effective cost-control measures, higher operating leverage, a land-lighter strategy and a dynamic pricing model bode well. Also, a stronger liquidity position places Lennar well for the future.
Over the past four weeks, shares have rallied 8.30%, and there have been 4 higher earnings estimate revisions in the past two months for fiscal 2023 compared to none lower. The consensus estimate has moved up as well.
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