LEN

Lennar Records Strongest First-Quarter Homebuilding Operating Margin in Six Years

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The nation’s third-largest homebuilder Lennar (LEN) reported strong first-quarter results Tuesday that revealed strong order growth, which largely eased concerns brought about by KB Home’s (KBH) recent disappointing order performance. Though we think the housing market will show continued stabilization and improvement during 2012, we’re not enthused by any of the valuations presented by homebuilding stocks at this time. We remain on the sidelines with respect to Lennar and its peers.   Lennar’s revenue increased 30% in the quarter, as deliveries expanded at a similar pace (29%) and the firm experienced positive pricing. New orders advanced 33%, to 3,022 homes, while the firm’s backlog increased to 2,711, up 39%. The firm’s cancellation rate came in at 18% during the period. The homebuilder’s … Read more

Lennar’s Order and Backlog Growth Impressive; Housing Market on the Mend

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On Wednesday, homebuilder Lennar (LEN) reported decent fourth-quarter results that showed strength in new orders and solid advancement in backlog. Though we remain unexcited about the homebuilding group in general, Lennar’s results today suggest that we may finally be past the bottom in housing (both with respect to unit growth and pricing). Our fair value estimate for Lennar is unchanged.   The homebuilder’s revenue jumped 11% thanks to a 9% growth in deliveries (3,375 homes) and a 2% increase in the average sales price of homes delivered. Lennar experienced new order growth of 20% (3,027 homes), and while this number fell below deliveries—indicating a book-to-bill below 1—we were encouraged at the pace of growth. The homebuilider’s backlog advanced an impressive … Read more

Dropping Coverage of the Homebuilders Industry

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Image Source: ArmchairBuilder.com Valuentum is dropping coverage of the homebuilders industry to allocate resources elsewhere. Structure of the Homebuilders Industry The meltdown in housing late last decade is a prime example of the extreme cyclicality of the homebuilding industry. Housing market health is determined by a number of variables: consumer confidence, employment, household formation, replacement demand (natural disasters), inventory (existing/shadow), interest rates, lending standards, and housing prices themselves. The market is far from homogenous, and stronger builders focus on regions with favorable supply/demand characteristics and pursue lot options instead of land purchases. Still, we don’t like the structure of the group given its boom and bust nature. CalAtlantic (CAA) CalAtlantic has agreed to be acquired by Lennar in a cash and … Read more

8 Announcements and Top Research You May Have Missed

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8 Announcements. This article was sent to members via email March 27. By Brian Nelson, CFA Hi everyone, Brian here. Trust you are doing great! Here are eight announcements I want you to be aware of: Everything we do is for our members. We’re very proud of the outperformance of the Best Ideas Newsletter portfolio, that we’ve never had a dividend cut in the Dividend Growth Newsletter portfolio, that our high-yield ideas are holding up very well, and the success rates of the Exclusive capital-appreciation ideas and short-idea considerations are running at approximately 80%. We’re proud to be your research partner. The odds of a Fed rate cut are going up as yield-curve inversion continues to threaten. The risks are more behavioral in … Read more

Stock Market Outlook for 2021

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By Valuentum Analysts February 8, 2021 2020 was one for the history books. We covered our thoughts and reflections on the past year in our “2020 Won’t Soon Be Forgotten” article (link here), and now we are looking towards the future. Global health authorities should be able to bring an end to the ongoing coronavirus (‘COVID-19’) pandemic sooner than many had expected as several vaccines have already been improved for emergency use and several others appear increasingly likely to get approved. Global vaccine distribution activities are currently underway, and this should allow the world to slowly return to pre-pandemic activities. Before then, immense stimulus measures launched primarily in developed nations should support global economic activities until the public health crisis … Read more

Top Research and Ideas You May Have Missed

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Is Quant Value Giving Intrinsic Value Investors a Bad Name? Surely, you don’t believe Warren Buffett’s “style” is out of favor? By Brian Nelson, CFA I need to make sure that you’re aware of something very important. The media and perhaps many investment professionals define the concept of “value” as companies with low price-to-book (P/B) ratios, and the concept of “growth” as companies with high price-to-book ratios. This definition of “value” and “growth” and their corresponding returns have been magnified in writings throughout the media and across quantitative research, even in prestigious journals. Warren Buffett has been rallying against most quantitative applications and how “growth” and “value” are defined in popular media and quantitative research for decades.  Here’s one of the Oracle’s most … Read more

The Best Years Are Ahead

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By Brian Nelson, CFA — The wind is at our backs. — The Federal Reserve, Treasury, and regulatory bodies of the U.S. may have no choice but to keep U.S. markets moving higher. The likelihood of the S&P 500 reaching 2,000 ever again seems remote, and I would not be surprised to see 5,000 on the S&P 500 before we see 2,500-3,000, if the latter may be in the cards. The S&P 500 is trading at ~4,100 at the time of this writing. — The high end of our fair value range on the S&P 500 remains just shy of 4,000, but I foresee a massive shift in long-term capital out of traditional bonds into equities this decade (and markets … Read more

Valuentum: Now Bearish, We’ve Been Here Every Step of the Way

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Valuentum Has Been Here Every Step of the Way   From the COVID-19 top in February 2020 to the COVID-19 bottom to the massive bull run through the end of 2021, we’ve been here for you.    2022 started out to be a rough year, catching many by surprise.   But Valuentum stayed positive. When the markets headed south in June, Valuentum stood its ground. On June 14, Valuentum said that “we still believe stocks could make a “huge rebound” in the near term.   We reiterated our views a few days later and on June 19, we said that “investors shouldn’t panic during this bear market” and that “stocks remain an attractive proposition at the moment and a very attractive consideration … Read more

Dividend Increases/Decreases for the Week of January 26

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Below we provide a list of firms that raised their dividends during the week ending January 26. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week                          Acerinox, S.A. (ANIOY): now $0.1219 per share semi-annual dividend, was $0.1159. Acuity Brands (AYI): now $0.15 per share quarterly dividend, was $0.13. ADT (ADT): now $0.055 per share quarterly dividend, was $0.035. Air Products and Chemicals (APD): now $1.77 per share quarterly dividend, was $1.75. ALLETE (ALE): now $0.705 per share quarterly dividend, was $0.6775. American Express (AXP): now $0.70 per share quarterly dividend, … Read more