LENNAR CORP /NEW/ (LEN): what the price requires

The current priced-in claim for LENNAR CORP /NEW/ (LEN) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/LEN

Headline

FieldValue
TickerLEN
CompanyLENNAR CORP /NEW/
Current price$82.48/sh
CompositionSales of homes 94% / Sales of land 0% / Other revenues 6%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Multiple paid4x operating income

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 8.3% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range

ReferenceValue
vs own history-1.31σ
cohort percentile (of 210 peers)1
implied end-window share0%

Valuation X-Ray

The price is supported by asset-based and relative-multiple value, while earnings-power/growth-DCF land below the price. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.08x4expensive
Earnings7.63x2expensive
Relative0.45x2justifies
Growth2.02x1expensive

Families that justify the price: Asset, Relative Families that call it expensive: Earnings, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.9%); the inversion above states its own rate.

Per-Model Detail (n=9)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$0.00—noReference only (OCF-based, capex excluded): OCF $0.1B
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$125.100.66xyesP/E 18x (static sector reference · 2026-04), scenarios: 15.3x / 18.0x / 20.7x (bear / base = reference held flat / bull), EV/EBITDA 12x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$79.081.04xyesBV/sh $89.51, ROE (TTM) 8.2%, ke 9.3%
Two-Stage Excess ReturnAsset$74.271.11xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$40.862.02xyesRev $33.2B, growth -7% (input: historical growth; tapered), Terminal P/S: 0.5x / 0.6x / 0.7x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$3.9520.88xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.79B × (1−23%) / WACC 7.9% → EPV (no growth) (excluded from median)
Residual IncomeAsset$73.511.12xyesBV $89.51 + 5yr PV of (ROE (TTM) 8.2% − Kₑ 9.3%) × BV; BV grows 5.3%/yr
Graham NumberAsset$118.310.70xyes√(22.5 × EPS $6.95 × BVPS $89.51) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$5.8214.17xyesEPS $6.95 × (8.5 + 2×-5.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$339.300.24xyesRevenue $33.17B × sector P/S 2.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$75.141.10xyesEPS $6.95 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Share count CAGR (buyback)-5.3%
Burning cashno

Operating profit is negative or near zero and the company has no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so years-to-repay cannot be computed honestly.

Operating profit is negative or near zero and there is no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so interest coverage cannot be computed honestly.

Bullet Takeaways

Bull Case

Lennar's structural advantage is its operating model, and you can see it in the margin and balance-sheet data. The company runs a land-light strategy: rather than tying up capital in large land banks, it controls lots through options and turns inventory quickly, which lowers the capital at risk in a downturn and lets it generate cash even when margins compress. That model is paired with what the company calls an "operating structure gives us the flexibility to make operating decisions based on local homebuilding conditions and customer preferences, while our centralized management structure provides strategic" scale. Local responsiveness plus national purchasing scale is how the largest builders out-earn the smaller ones through a cycle.

Scale shows up directly in cost. Lennar improved construction cost per square foot to $81, down 7% from a year earlier, and reached a record-low cycle time, the speed at which it builds and delivers a home. Faster cycle times and lower per-foot costs are the levers a high-volume builder pulls to protect returns when pricing is soft, and Lennar is pulling both. Delivering over 20,500 homes near the high end of guidance while cutting costs is the volume machine working as designed.

The balance sheet is the quiet anchor of the bull case. Net debt sits at well under half a year of operating income, with liquid assets of roughly $3.8 billion, an unusually strong position for a cyclical homebuilder. The share count has fallen about 4.5% a year, so the company is returning capital while staying conservatively financed. A builder this large, this low-cost, and this lightly levered can keep buying back stock and self-funding through a housing slowdown, then take share as smaller, more leveraged competitors retrench. The price values it at roughly 4 times operating income, and the asset-and-profitability methods say that is too cheap for a franchise with this balance sheet.

Bear Case

The bear case for Lennar is that today's earnings are near a cyclical high and the margin is already rolling over. Homebuilding gross margin compressed to 15.6% from 17.8% year over year, and the company is leaning on sales incentives to keep volume up, with the filing noting that gross margin fell on "lower revenue per square foot and higher land costs year over year, partially offset by a decrease in construction costs". Net earnings fell to $305 million from $477 million a year earlier. A homebuilder selling the same number of houses for less profit each is the early signature of a demand problem, and the price has to reckon with earnings that may be closer to the top of the cycle than the bottom.

The structural exposure is to mortgage rates and affordability, neither of which Lennar controls. Demand for new homes is acutely sensitive to financing costs, and the incentives Lennar is using, rate buydowns and price concessions, are themselves a margin cost that masks how soft underlying demand is. Sales incentives did improve to 12.9% of deliveries from 14.1% in the prior quarter, but that is still a heavy promotional level, and it points to a market where the builder, not the buyer, is absorbing the affordability gap. If rates stay high or the economy weakens, volume and margin can fall together.

Where the valuation is concerned, the methods split in a way that flatters the asset case and warns on the earnings case. The asset-value and relative-multiple methods land near or above the price, but the earnings-power and forward-growth methods sit far below it, with the zero-growth earnings read implying the current profit level is not durable. That divergence is the bear's point: if homebuilding earnings normalize to a mid-cycle level, the price looks much less cheap than 4 times trailing operating income suggests. The balance sheet is genuinely strong, so this is not a solvency bear; it is a cyclical-earnings bear, and the risk is that the market is anchoring on peak profitability that a higher-for-longer rate environment erodes.

Valuation

Lennar screens cheap, and the question is whether the earnings behind the multiple are durable. At today's price the shares trade around 4 times company-wide operating income, low enough that the price sits below what even a 5%-a-year decline in operating profit would warrant. That is a bound rather than a precise solve, and the read frames Lennar as a value and asset-supported name. The catch is that homebuilder earnings are cyclical, so a 4-times multiple on trailing profit can be deceptive if that profit is near a peak.

The methods disagree in a revealing pattern. The asset-value methods, anchored on book value and the company's return on equity, land near or above the price, and the relative-multiple lens against the homebuilder cohort reaches above it too. But the earnings-power methods, which capitalize normalized operating profit with no growth, sit far below the price, and the forward-growth methods also fall short. That split says the value case rests on the assets and the cohort multiple, while the earnings-based methods are warning that today's margin is unlikely to hold. The honest read is that the cheapness is real on an asset basis and contingent on a non-collapsing market on an earnings basis; the gross-margin compression this quarter is the evidence the earnings methods are pricing.

Solvency is the clean part and it bounds the downside well. Net debt is well under half a year of operating income, with liquid assets near $3.8 billion and interest expense not separately broken out but coverage clearly ample given the modest leverage. The share count is falling about 4.5% a year. This is a homebuilder built to survive a downturn, which is exactly why it can take share when weaker builders cannot. The downside is bounded less by the balance sheet than by how far housing margins fall; the price assumes a soft-but-not-broken market, and the methods that lean on assets agree that is a reasonable bet.

Catalysts

The second quarter of 2026 showed volume holding and margin under pressure. Lennar delivered 20,519 homes, in line with guidance, and generated 21,749 new orders near the high end of expectations, but net earnings fell to $305 million, or $1.24 per diluted share, from $477 million a year earlier. Homebuilding gross margin compressed to 15.6% from 17.8% and SG&A rose to 9.2% from 8.8%, though sales incentives on deliveries eased to 12.9% from 14.1% in the prior quarter, a tentative sign of stabilization.

Cost control was the bright spot. Construction cost per square foot improved to $81, down 7% year over year, alongside a record-low cycle time, both evidence of the operating model working through a tough demand environment.

Management guided the third quarter to 20,500 to 21,500 deliveries, gross margin of approximately 16%, SG&A of 8.8% to 9.0%, and an average sales price of $375,000 to $380,000, while moderating the full-year delivery target to roughly 82,000 to 83,000 homes. The near-term watch items are whether gross margin recovers toward that 16% guide and whether the easing in incentives continues, since the level of incentives is the cleanest read on how much affordability support the market still requires.

Peer Cohorts (Per Segment, With Filing Citations)

Homebuilding (reported)

Financial Services (reported)

Multifamily (reported)

Lennar Other (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Lennar Q2 2026 earnings call, June 2026 · Lennar Q2 2026 earnings release, June 2026 · Lennar Q2 2026 results, June 2026

View the full interactive LEN report on boothcheck