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1. Company Snapshot

1.a. Company Description

Lennar Corporation, together with its subsidiaries, operates as a homebuilder primarily under the Lennar brand in the United States.It operates through Homebuilding East, Homebuilding Central, Homebuilding Texas, Homebuilding West, Financial Services, Multifamily, and Lennar Other segments.The company's homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development, and sale of residential land; and development, construction, and management of multifamily rental properties.


It also offers residential mortgage financing, title insurance, and closing services for home buyers and others, as well as originates and sells securitization commercial mortgage loans.In addition, the company is involved in the fund investment activity.It primarily serves first-time, move-up, active adult, and luxury homebuyers.


Lennar Corporation was founded in 1954 and is based in Miami, Florida.

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1.b. Last Insights on LEN

Lennar Corporation's recent performance was negatively impacted by a weaker-than-expected Q3 report, with the company citing soft market conditions, affordability challenges, and margin pressure. The housing market's downturn, characterized by high mortgage rates and decreased consumer confidence, led to a revenue miss and a disappointing fiscal fourth-quarter forecast. Additionally, the company's recent earnings revisions have been negative, earning it a Zacks Rank #5 (Strong Sell). Furthermore, rising land costs and increased sales incentives have put pressure on gross margins.

1.c. Company Highlights

2. Lennar's Q3 2025 Earnings: Softening Market Conditions and Strategic Adjustments

Lennar reported a slight miss in Q3 deliveries, with 21,500 homes delivered, and a gross margin of 17.5%, lower than expected. The company's average sales price was $383,000, and incentives rose to 14.3%. Earnings per share (EPS) came in at $2, below analyst estimates of $2.1. Revenue growth was driven by the sale of over 23,000 homes, exceeding expectations. The company's financial services segment reported operating earnings of $177 million, driven by a higher profit per loan.

Publication Date: Oct -24

📋 Highlights
  • Q3 Deliveries and Sales:: Sold 23,000 homes, delivered 21,500, with gross margin at 17.5% (below goal) and incentives at 14.3%.
  • Adjusted Guidance:: Q4 delivery target cut to 22,000-23,000 homes; full-year revised to 81,500-82,500 homes due to market pressures.
  • Operational Efficiency:: Direct construction costs fell 1% QoQ, cycle time for single-family homes dropped to 126 days (-10% YoY), and inventory turnover hit 1.9x.
  • Financial Strength:: $1.4B cash, $5.1B liquidity, and Financial Services operating earnings of $177M driven by higher loan profits.
  • Strategic Focus:: Aiming for 17.5% gross margin in Q4, 7.8-8% SG&A, and maintaining low-cost production with 4.7 sales pace per community.

Operational Highlights

Lennar achieved a sales pace of 4.7 homes per community per month and a start pace of 4.4 homes per community per month. Direct construction costs decreased by approximately 1% from the second quarter and 3% year-over-year. The company also achieved a 10% year-over-year reduction in cycle time for single-family detached homes, to 126 calendar days. These operational efficiencies are expected to drive cost savings and improve profitability.

Guidance and Outlook

Lennar is easing back on delivery expectations for the fourth quarter and full year to relieve pressure on sales and margin. The company expects deliveries between 22,000 and 23,000 homes in Q4, and an average sales price between $380,000 and $390,000. Gross margin is expected to remain around 17.5%. The company's guidance suggests a cautious approach to navigating the current market conditions, while maintaining a focus on efficiency and profitability.

Valuation and Growth Prospects

With a P/E Ratio of 12.28 and an EV/EBITDA of 8.49, Lennar's valuation appears reasonable compared to its earnings growth prospects. Analysts estimate revenue growth at 2.5% next year. The company's focus on efficiency, technology, and maintaining a strong national footprint positions it for long-term growth. Lennar's return on equity (ROE) of 11.21% and return on invested capital (ROIC) of 9.2% indicate a strong ability to generate returns for shareholders.

Management's Strategy and Focus

Lennar's management is focused on driving cash flow, returning capital to shareholders, and maintaining a strong balance sheet. The company has a steady program of returning capital to shareholders and is focused on total shareholder return. With a dividend yield of 1.55%, Lennar offers an attractive return for income investors. The company's strategy is centered around maintaining high-volume production, leveraging technology, and positioning as a leading technology-enabled, low-cost homebuilding manufacturer.

3. NewsRoom

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Lennar (LEN) Surpasses Market Returns: Some Facts Worth Knowing

Dec -03

Source:

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Lennar Corporation to Broadcast Its Fourth Quarter Earnings Call on December 17, 2025

Dec -03

Source: prnewswire.com

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Millrose Properties, Inc. Comments on Completion of Lennar Exchange Offer

Dec -01

Source: businesswire.com

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Lennar Exchange Offer Oversubscribed Ahead Of Final Proration

Nov -24

Source: gurufocus.com

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Stocks in This Sector Are Getting a Big Lift on Rising Hopes of a Fed Rate Cut Next Month

Nov -21

Source: investopedia.com

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Trump's 50-Year Mortgage Idea Could Be A Big Gift To REITs

Nov -20

Source: seekingalpha.com

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17 Capital Partners LLC Cuts Stock Position in Lennar Corporation $LEN

Nov -20

Source: defenseworld.net

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4 No-Brainer Dividend Stocks to Buy Right Now -- and a 17% Dividend Yield to Avoid

Nov -19

Source: fool.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.07%)

6. Segments

Homebuilding - West

Expected Growth: 5.2%

The 5.2% growth in Lennar Corporation's Homebuilding - West segment is driven by strong housing demand, favorable interest rates, and efficient land acquisition strategies. The company's focus on affordable housing, innovative construction techniques, and strategic expansion into high-growth markets also contribute to its growth momentum.

Homebuilding - East (Inc. Homebuilding Southeast Florida)

Expected Growth: 4.8%

Lennar Corporation's Homebuilding East segment, including Southeast Florida, grew 4.8% due to increased demand for new homes, driven by low interest rates, favorable demographics, and a shortage of existing inventory. The region's economic growth, job market strength, and population expansion also contributed to the segment's growth, as homebuyers took advantage of relatively affordable housing options.

Homebuilding - Central (Incl. Homebuilding Houston)

Expected Growth: 5.1%

Lennar Corporation's Homebuilding - Central segment, including Homebuilding Houston, growth of 5.1% is driven by factors such as favorable demographic trends, urbanization, low interest rates, and government incentives. Additionally, Lennar's strategic land acquisitions, efficient operating model, and adaptability to market conditions contribute to its growth.

Homebuilding - South Central

Expected Growth: 4.9%

The 4.9% growth in Lennar Corporation's Homebuilding - South Central segment is driven by strong housing demand, favorable demographics, and economic growth in the region. Additionally, the company's strategic land acquisitions, efficient operating model, and focus on affordable housing options have contributed to its success in this segment.

Homebuilding - Other

Expected Growth: 5.5%

Lennar's Homebuilding - Other segment growth of 5.5% is driven by increasing demand for housing, favorable interest rates, and efficient land acquisition strategies. The company's focus on affordable housing, innovative construction techniques, and strategic partnerships also contribute to its growth. Additionally, Lennar's ability to adapt to changing market conditions and its strong balance sheet support its expansion in the homebuilding sector.

Financial Services (Incl. Rialto)

Expected Growth: 6.0%

The Financial Services segment growth of 6.0% is driven by increased origination volumes, higher interest income, and improved profitability from Rialto, Lennar's financial services arm. This growth is also attributed to favorable market conditions, including low interest rates and increased demand for mortgage products. Efficient operations and effective risk management also contribute to this growth.

Multifamily

Expected Growth: 5.8%

Lennar Corporation's multifamily segment growth of 5.8% is driven by strong demand for rental housing, favorable demographic trends, and strategic land acquisitions. The company's focus on affordable luxury apartments and urbanization also contributes to its growth. Additionally, Lennar's expertise in multifamily development and management enables it to capitalize on market opportunities, driving revenue and profit growth.

Lennar Other

Expected Growth: 4.5%

Lennar Other's 4.5% growth is driven by increasing demand for financial services, driven by higher interest rates and an expanding mortgage market. Additionally, the segment's cyclical business, including investment and land sales, benefits from a strong housing market and limited supply, contributing to revenue growth.

7. Detailed Products

Homebuilding

Lennar Corporation's homebuilding segment focuses on constructing and selling single-family homes in the United States, primarily in the eastern, western, and southern regions.

Investment Property

Lennar Corporation also sells homes to investors, who purchase properties for rental income or resale value.

Multifamily

Lennar Corporation's multifamily segment focuses on developing, acquiring, and managing apartment communities and other multifamily properties.

Land

Lennar Corporation sells land to homebuilders, developers, and other customers for use in various projects, including residential, commercial, and industrial developments.

Financial Services

Lennar Corporation's financial services segment provides mortgage financing, title insurance, and other financial services to homebuyers and investors.

Reno

Lennar Corporation's Reno segment focuses on providing a direct-to-consumer home renovation platform for homeowners.

8. Lennar Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Lennar Corporation operates in the homebuilding industry, which has a low threat of substitutes. Customers typically require a physical location to live, and alternative options such as renting or alternative housing types (e.g., condos, townhouses) are not perfect substitutes for single-family homes.

Bargaining Power Of Customers

While individual homebuyers have some bargaining power, Lennar Corporation's large size and market share give it some negotiating power with customers. Additionally, the homebuilding industry is highly competitive, which limits the bargaining power of individual customers.

Bargaining Power Of Suppliers

The homebuilding industry has a large number of suppliers, which reduces the bargaining power of individual suppliers. Additionally, Lennar Corporation's large size allows it to negotiate favorable prices with suppliers.

Threat Of New Entrants

The homebuilding industry has relatively high barriers to entry, including land acquisition costs, regulatory requirements, and high capital requirements. However, there are still opportunities for new entrants, particularly in specific geographic markets.

Intensity Of Rivalry

The homebuilding industry is highly competitive, with a large number of competitors, including large national builders like Lennar Corporation, as well as smaller regional builders. This competition leads to pricing pressure, marketing expenses, and innovation.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 7.50%
Debt Cost 4.32%
Equity Weight 92.50%
Equity Cost 11.15%
WACC 10.64%
Leverage 8.10%

11. Quality Control: Lennar Corporation passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Growth: 8.8

Quality: 7.6

Yield: 2.0

Momentum: 4.0

Volatility: 6.3

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A-Score: 5.4/10

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Quality: 7.1

Yield: 3.0

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Quality: 7.5

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Yield: 3.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

123.91$

Current Price

123.91$

Potential

-0.00%

Expected Cash-Flows