Yahoo Finance Lennar (LEN) Upgraded to Buy: Should You Add the Stock?
On Jan 17, Lennar Corporation LEN was upgraded by a notch to a Zacks Rank #2 (Buy). Going by the Zacks model, companies with a ‘Buy’ rating are likely to perform better than the broader market.
Post the company’s fourth-quarter fiscal 2016 earnings release (Dec 19, 2016), Lennar’s stock recorded growth of 2.4%, beating the 0.7% return of the Zacks categorized Building-Residential/Commercial industry.
Why the Upside?
The company’s recent earnings estimates revisions have been encouraging. The current year has seen four estimates move north in the last 30 days. Earnings estimates for fiscal 2017 moved up 1.5%. Also, the company has an impressive earnings history, beating estimates for the fifth consecutive quarter.
Lennar Corporation Price and Consensus
Lennar Corporation Price and Consensus | Lennar Corporation Quote
The company also surpassed the Zacks Consensus Estimate for both earnings and revenues in the fourth quarter of fiscal 2016 by 5.5% and 1.6%, respectively. Earnings increased 10.7% year over year driven by strong revenues and improved SG&A leverage. Revenues also grew 14.6% year over year, buoyed by higher deliveries.
The company is one of the best positioned homebuilders to capitalize on the housing recovery, courtesy of the diverse revenue mix, steady top-line performance, above-average order growth and improving SG&A leverage.
In fiscal 2017, the company expects growth rate between 7% and 10%. Gross margin is projected in the range of 22% to 22.5%. Lennar is focused on bringing down SG&A expenses to the 9.1% to 9.3% range in 2017, banking on operating leverage and investments in technology.
Key Picks
Some other equally ranked stocks in the industry are Beazer Homes USA, Inc. BZH, CalAtlantic Group, Inc. CAA and Century Communities, Inc. CCS. You can see the complete list of today’s Zacks #1 Rank stocks here.
Beazer is expected to witness 60% growth in 2016 earnings whereas CalAtlantic’s earnings are likely to grow 3.8%.
Century Communities surpassed earnings estimates in all the trailing four quarters with an average beat of 5.1%.
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Lennar Corporation (LEN): Free Stock Analysis Report
Beazer Homes USA, Inc. (BZH): Free Stock Analysis Report
Century Communities, Inc. (CCS): Free Stock Analysis Report
CalAtlantic Group, Inc. (CAA): Free Stock Analysis Report
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