LENNAR CORP-A (NYSE:LEN) – A Strong Contender for GARP Investors

LENNAR CORP-A (NYSE:LEN) stands out as a compelling candidate for investors seeking growth at a reasonable price (GARP). The company, a leading homebuilder and real estate services provider, meets key criteria from Peter Lynch’s investment strategy, balancing solid growth with sound financial health and an attractive valuation.

Why LEN Fits the GARP Approach

• Sustainable Growth: LEN has delivered a 5-year average EPS growth of 20.01%, aligning with Lynch’s preference for companies growing between 15% and 30%. This steady growth suggests the company can maintain its momentum without overextending.
• Reasonable Valuation: With a PEG ratio of 0.48 (well below Lynch’s threshold of 1), LEN appears undervalued relative to its growth potential. The P/E ratio of 9.63 further supports this, trading below both industry and S&P 500 averages.
• Strong Financial Health: The company’s debt-to-equity ratio of 0.16 reflects minimal reliance on borrowing, while a current ratio of 8.37 highlights ample liquidity to cover short-term obligations.
• Profitability: LEN’s return on equity (ROE) of 16.26% exceeds Lynch’s 15% benchmark, indicating efficient use of shareholder capital.

Fundamental Snapshot

Our full analysis rates LEN a 7/10, noting its standout profitability and financial health. Key strengths include:

• High operating margin (13.74%) and improving gross margins.
• Consistent dividend growth, with a payout ratio of just 14.64%, leaving room for future increases.
• A strong Altman-Z score (4.39), signaling low bankruptcy risk.

While recent EPS growth has slowed, analysts project a 9.89% annual earnings increase over the coming years, paired with steady revenue growth.

For more stocks matching the Peter Lynch strategy, explore our screener results.

Disclaimer

This is not investing advice. Always conduct your own research before making investment decisions.