Lennar Stock Declines Despite Solid Fundamentals - Is the Market Mispricing This Homebuilder?
-
Lennar's (NYSELEN) share price has declined 18% in 3 months despite solid financials, leading to questions about whether the market has misjudged the stock.
-
Return on equity (ROE) measures a company's profitability relative to shareholders' equity. Lennar has a decent ROE of 15%.
-
Higher ROE and profit retention typically indicate greater potential for earnings growth. Lennar's 23% net income growth over 5 years supports this.
-
However, Lennar's growth is below the industry average of 31%, raising questions about growth prospects.
-
Lennar seems to be efficiently reinvesting profits to fuel growth, with a low dividend payout ratio of 8.5%. But future payouts are expected to rise to 11%.