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Is Lennar (LEN) Stock Undervalued Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is Lennar (LEN). LEN is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 10.02, while its industry has an average P/E of 10.85. LEN's Forward P/E has been as high as 10.44 and as low as 5.77, with a median of 8.59, all within the past year.

Investors should also note that LEN holds a PEG ratio of 1.11. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. LEN's industry has an average PEG of 1.17 right now. Over the last 12 months, LEN's PEG has been as high as 1.19 and as low as 0.33, with a median of 0.64.

We should also highlight that LEN has a P/B ratio of 1.22. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. LEN's current P/B looks attractive when compared to its industry's average P/B of 1.35. Over the past 12 months, LEN's P/B has been as high as 1.27 and as low as 0.84, with a median of 1.06.

Finally, investors will want to recognize that LEN has a P/CF ratio of 9.32. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. LEN's P/CF compares to its industry's average P/CF of 9.39. LEN's P/CF has been as high as 11.33 and as low as 7.03, with a median of 8.49, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Lennar is likely undervalued currently. And when considering the strength of its earnings outlook, LEN sticks out at as one of the market's strongest value stocks.


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