Lennar Corporation (LEN)

Conclusion

Lennar Corporation is a Miami-based US homebuilder that sells single-family and attached homes, residential land and multifamily rentals, and offers mortgage and title services to its buyers. At 91.58 USD on 2026-11-09, the company has a market capitalisation of 19.0 billion USD.

The verdict is overvalued. The P/E of 14.5x sits 33.4% above its ten-year median of 10.9x, and price to free cash flow of 21.0x is 55.5% above its median of 13.5x. Price to sales (0.60x) and price to book (0.88x) are below their medians. The DCF gives 56.37 USD per share at a discount rate of 11.8%, and the fair value from historical multiples is 83.64 USD. The fair value band runs from 56.00 to 84.01 USD with a midpoint of 70.00 USD, a margin of safety of -23.6% at the current price. The reverse DCF implies growth of 14.2% a year, against revenue growth of 8.7% a year over five years and a five-year decline of 61.7% a year in free cash flow per share.

What holds the case up is the Altman Z-score of 3.57, the net debt to EBITDA of 1.57 and the revenue growth of 8.7% a year over five years. What would break it is the ROIC of 7.8% against a WACC of 10.7%, the operating margin of 5.3% against a ten-year median of 12.7%, and the 19.4% cut to next-year estimates over the past 90 days.

Financial health

Financial strength is green, held up by the Altman Z-score of 3.57 and net debt to EBITDA of 1.57, and held back only by interest coverage of 7.7x, which is rated neutral. The current ratio is 8.38 and the quick ratio 1.16, both as of 2026-08-31, and debt to equity is 0.20. The Altman Z-score sits in the safe zone, although that model was designed for manufacturers rather than homebuilders. Insolvency risk is low, at about 0.12% by the estimate of the Ohlson model over one to two years, based on figures as of 2025-11-30.

Earnings quality

Earnings quality is yellow. Free cash flow conversion is 69.3% on a trailing basis and 68.5% over five years, and the accrual ratio is 4.9%. Stock-based compensation is 0.45% of revenue, and free cash flow after it is 765.2 million USD. The share count fell 3.6% a year over five years, reflecting buybacks. The Piotroski score is 4 of 9. The Beneish M-score of -1.75 falls in the range the model reads as likely manipulation, so reported figures need scrutiny. The company beat estimates in 3 of the last 8 quarters and missed in 5, with an average surprise of 8.2%. Current-year estimates were cut 11.0% over 90 days, with 5 downward revisions and none upward in the last 30 days. Next-year estimates were cut 19.4%, with 10 downward revisions.

Profitability

Profitability is red. The gross margin of 9.5% compares with a ten-year median of 14.6%, the operating margin of 5.3% with 12.7%, and the net margin of 4.1% with 9.6%. ROIC is 7.8% against a WACC of 10.7%, giving a ROIC minus WACC of -2.9%, which the scorecard reads as destroying value. The five-year median ROIC is 22.0%. The DuPont split shows a net margin of 6.1%, an asset turnover of 0.99 and an equity multiplier of 1.57, which gives a return on equity of 6.1%. Leverage is modest, so the return on equity is not inflated by debt; it is low because margins are thin. The DuPont figures are as of 2025-11-30.

Growth

Growth is green. Revenue compound growth is 0.5% over three years, 8.7% over five years and 13.7% over ten years, and revenue grew in 9 of the 10 comparable years. Earnings per share show a weaker picture, with compound growth of -20.3% over three years, 0.2% over five years and 9.0% over ten years. Free cash flow per share fell at a compound rate of 78.5% over three years and 61.7% over five. The next-year growth estimate is 5.8%.

Valuation

Valuation is red, as the verdict is overvalued with a margin of safety of -23.6%. Today's P/E of 14.5x is 33.4% above its ten-year median, EV to EBITDA of 11.1x is 8.0% above its median, and price to free cash flow is 55.5% above its median. Price to sales and price to book are 40.3% and 34.6% below their medians. The DCF gives 56.37 USD per share at a discount rate of 11.8%, with the terminal value making up 45.7% of that figure. The fair value from historical multiples is 83.64 USD. The reverse DCF implies growth of 14.2% a year, against 8.7% revenue growth over five years. The fair value band is an order of magnitude built on fixed assumptions, including a 5% equity risk premium and capped growth, and is not a price target. The dividend yield is 2.6%, the payout on free cash flow is 54.2%, and the forward yield is 2.2%.

Risks

The weakest numbers point to the main risks. A ROIC of 7.8% below a WACC of 10.7% means that capital is currently not earning its cost, and the operating margin of 5.3% against a median of 12.7% leaves little room for further pressure. The 19.4% cut to next-year estimates and the falling free cash flow per share suggest that earnings may fall further, and the Beneish reading calls for caution about the reported figures. Interest coverage of 7.7x is rated on watch. The analysis has limits: no debt maturity schedule and no revenue by segment are available, so the timing of debt repayments and the mix of homebuilding and financial services cannot be assessed. The Ohlson estimate and the DuPont split rest on figures as of 2025-11-30.