Lennar Corporation (NYSE:LEN) has been performing well in the past year and is up by 60.46% in the last 52-weeks. Year-to-date, its overall trajectory has been up, with minor dips in between.
In the last 5-days of trading, it was in the green. Despite a dip towards the end of the week, it still closed higher by 3.72% on Friday.
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However, with the markets increasingly choppy due to inflation concerns and the possibility of an interest rates hike, one may wonder, is LEN a good investment?
Analysts are optimistic about this stock
Despite the stock markets being in what some may consider a bubble, analysts give this stock a vote of confidence in the short term.
One of the analysts that have a positive outlook on this stock is Keycorp. Keycorp expects this company’s revenues to grow in Q3 and has raised its Q3 earnings estimates from an EPS of $2.96 to $3.27.
Credit Suisse has also raised its price projections for this stock. The investment bank has raised its price target for LEN to $107, from an earlier estimate of $90. It also updated its rating of the stock to neutral in its March 18th review.
Wolfe Research is another market analyst that is quite bullish on LEN. In its most recent ranking, Wolfe held that it expects this stock to outperform the market. Another market analyst and research firm that is bullish on this stock is Evercore ISI. In their latest market report that was published on June 14th, Evercore announced that it expected this stock to outperform the market and possibly trade between $121 and $161.
BTIG Research is also pretty bullish on LEN and has revised its expectations upwards. In a report released last Friday, BTIG now rates this stock as “buy†and has given it a target of between $117 and $127.
Its debt is within manageable levels
The Fed is expected to raise interest rates soon, and this has seen the dollar rally against all major currencies. However, this could pose a risk to over-leveraged companies.
On this metric, LEN is in a pretty safe zone. That’s because its debt-to-equity ratio is at 0.31. Essentially this means that its debt is 31% of the total equity. In the stock markets, this is considered low risk. It is a company that is unlikely to get hurt by an increase in interest rates. It also has the room to borrow more if the need arises.
The technicals are also matching the bullish nature of this company’s fundamentals.
The chart shows growing bull strength
LEN has been trading sideways in the past three months, but upside momentum is on the rise. The momentum is so strong that the stock has pushed through the 100-day moving average resistance at $95.48 with high volumes.
Bottom line: Bulls are in control but wait for confirmation
Of all the analysts that have reviewed this company, they all believe that it is a stock worth buying.
Going by the technicals, this stock is gaining and has crossed a key resistance over the past month. This confirms the analysts’ outlook. However, the broader market is yet to find direction after the interest rates announcement by the Fed.
As such, it could face downside pressure from the broader market in the short term. For this reason, it would be best to wait for it to push through the 50-day moving average resistance at $99.67. If it goes through this price level with high volumes, it would be confirmation that bulls are firmly in control, and higher prices are a possibility.
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