XHB - 3 Reasons To Avoid Lennar Corporation Stock

2024-06-10 12:07:16 ET

Summary

• Lennar Corporation's stock appears reasonably valued at just over 11 times trailing earnings, but home builders typically trade discounted to the overall market.
• In addition, technical resistance of the stock suggests it may be topping out, while the housing sector is facing considerable headwinds and worsening affordability levels.
• The slowing economy and rising unemployment will further reduce housing demand and put more existing homes on the market, negatively impacting home builders like Lennar.
• We offer up three key reasons why the shares of Lennar are an "avoid" despite being considerably cheaper than the overall market in the paragraphs below.

Today, we take a look at giant home builder Lennar Corporation ( LEN ) . The company's stock seems reasonably valued at just over 11 times trailing earnings, given the median analyst firm growth projections for both sales and profits in FY2024 and FY2025. That comes with the caveat that home builders almost always trade at a significant discount to the overall market due to the historical cyclicality of the industry. That said, the S&P 500 (SP500) currently is valued at just over 21 times forward earnings. The shares also sport a 1.3% dividend yield....

For further details see: