Is Lennar (LEN) Setting Up for a Breakout?

After merging with CalAtlantic in February 2018, Lennar Corporation (LEN) has become the largest public homebuilder by revenue in the United States. The company’s homebuilding operations target first-time, move-up, and active adult homebuyers mainly under the Lennar brand name…

Lennar Corporation (LEN) is benefiting from cost control and a focus on making its homebuilding platform more efficient. LEN is seeing higher demand for new homes due to declining mortgage rates and low inventory. The company has also lifted its average selling price and margin expectation for fiscal 2021.

As of the most recent quarter, the company had a quick ratio of 3.9 which indicates it has more than enough liquidity. From a growth standpoint, LEN has grown earnings by an average of 23.7% per year over the past five years.   

Analysts expect earnings to rise 54.7% year over year in the current quarter. The stock appears undervalued based on its trailing P/E of 9.79. The stock showed bullish momentum from November to May, then fell over the next couple months only to recover this summer. This is evident in the chart below.

Take a look at the 1-year chart of LEN below with added notations…

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