Lennar (LEN) Sees Positive Pricing Trends Despite Lumber Causing Pressure, KeyBanc Reiterates Sector Weight

June 18, 2021 6:52 AM EDT
Get Alerts LEN Hot Sheet
Price: $105.38 +0.22%

Rating Summary:
    20 Buy, 13 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 18 | Down: 13 | New: 23
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KeyBanc analyst Kenneth Zener reiterated a Sector Weight rating on Lennar (NYSE: LEN) after the company 2Q21 revenue rose 21% y/y, with closings up 14% and price up 6%, with 26.1% adjusted gross margin up 450 bps y/y, with 7.6% SG&A and EBT of 18.5%. With rising input cost (lumber) impacting 2Q/3Q results, guidance shows net pricing trends are still favorable, with a blue-sky scenario pointing to lower input costs in FY22.

The analyst stated "LEN results ($2.65 vs. our $2.35, margin beat) reflect sustainable (less land = more cash, spin-outs = simplification) and transitory (price = margins) factors that were unimaginable a year ago, between which investors increasingly need to discriminate. For LEN, rising returns on inventory (ROI) mirror net price leverage amid less capital intensity (land), lifting asset turns and cash (net leverage 14%). We raise our FY21E EPS to $13.75 (was $12.07) and FY22E to $12.48 (was $9.74), both years on higher margins."

For an analyst ratings summary and ratings history on Lennar click here. For more ratings news on Lennar click here.

Shares of Lennar closed at $94.65 yesterday.

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