Lennar Stock: Is LEN Underperforming the Consumer Discretionary Sector?

Miami-based Lennar Corporation (LEN) is a leading homebuilder in the United States, valued at a market cap of $37.5 billion. Lennar operates through Homebuilding East, Homebuilding Central, Homebuilding Texas, Homebuilding West, Financial Services, Multifamily, and Lennar Other segments.

Companies worth $10 billion or more are generally described as “large-cap stocks,” Lennar fits right into that category, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the residential construction industry.

Its status as one of the largest homebuilders in the U.S. is supported by a geographically diverse footprint that mitigates regional market risks. The company’s focus on efficient operations, advanced construction techniques, and cost controls enables it to maintain strong margins while offering competitively priced homes. Lennar’s strategic land acquisition and development practices ensure a robust inventory to meet demand across various buyer segments. 

Lennar shares have dropped 28.8% from their 52-week high of $193.80 achieved on Sept. 19. LEN has declined 24.2% over the past three months, underperforming the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 16.4% returnsover the same time frame. 

Over the longer term, LEN has plummeted 5.9% over the past 52 weeks and 7.4% in 2024. In comparison, XLY has returned 28.5% gains over the past year and 28% returns on a YTD basis.

To confirm the bearish trend, Lennar has mostly traded below its 50-day and 200-day moving averages since early December. 

On Dec. 18, Lennar released its Q4 earnings, reporting adjusted EPS of $4.03 and revenue of $9.95 billion, both missing market expectations. The company also provided a Q1 new orders forecast of 17,500 to 18,000, falling short of the consensus estimate of 20,110. These disappointing results triggered a decline of over 8% in the stock during subsequent trading sessions, with shares continuing to trade in the red.

Lennar’s competitor, PulteGroup, Inc. (PHM), has outperformed LEN. PHM has gained 8.3% over the past 52 weeks and 7.1% in 2024.

Among the 19 analysts covering the LEN stock, the consensus rating is a “Moderate Buy.” The mean price target of $192.86 represents a potential upside of 39.7% from current price levels.

On the date of publication,

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