Intrinsic value of Lennar Cl A - LEN

Previous Close

$51.88

  Intrinsic Value

$119.06

stock screener

  Rating & Target

str. buy

+129%

  Value-price divergence*

+47%

Previous close

$51.88

 
Intrinsic value

$119.06

 
Up/down potential

+129%

 
Rating

str. buy

 
Value-price divergence*

+47%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of LEN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 11.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  15.58
  17.20
  15.98
  14.88
  13.89
  13.00
  12.20
  11.48
  10.84
  10.25
  9.73
  9.25
  8.83
  8.45
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
Revenue, $m
  10,950
  12,833
  14,884
  17,099
  19,475
  22,008
  24,693
  27,529
  30,512
  33,640
  36,912
  40,328
  43,888
  47,595
  51,450
  55,459
  59,625
  63,954
  68,453
  73,129
  77,991
  83,047
  88,308
  93,784
  99,487
  105,430
  111,625
  118,086
  124,828
  131,866
  139,218
Variable operating expenses, $m
 
  11,190
  12,978
  14,908
  16,979
  19,187
  21,528
  23,999
  26,599
  29,326
  32,178
  35,151
  38,254
  41,485
  44,846
  48,340
  51,971
  55,744
  59,666
  63,742
  67,979
  72,387
  76,972
  81,746
  86,717
  91,896
  97,296
  102,928
  108,804
  114,939
  121,347
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  9,620
  11,190
  12,978
  14,908
  16,979
  19,187
  21,528
  23,999
  26,599
  29,326
  32,178
  35,151
  38,254
  41,485
  44,846
  48,340
  51,971
  55,744
  59,666
  63,742
  67,979
  72,387
  76,972
  81,746
  86,717
  91,896
  97,296
  102,928
  108,804
  114,939
  121,347
Operating income, $m
  1,330
  1,643
  1,907
  2,191
  2,496
  2,821
  3,166
  3,530
  3,913
  4,314
  4,734
  5,177
  5,634
  6,109
  6,604
  7,119
  7,654
  8,209
  8,787
  9,387
  10,011
  10,660
  11,336
  12,039
  12,771
  13,534
  14,329
  15,158
  16,024
  16,927
  17,871
EBITDA, $m
  1,380
  1,673
  1,940
  2,229
  2,539
  2,869
  3,219
  3,589
  3,978
  4,385
  4,812
  5,257
  5,721
  6,205
  6,707
  7,230
  7,773
  8,337
  8,924
  9,533
  10,167
  10,826
  11,512
  12,226
  12,970
  13,744
  14,552
  15,394
  16,273
  17,191
  18,149
Interest expense (income), $m
  67
  220
  270
  325
  384
  447
  514
  586
  662
  741
  825
  912
  1,003
  1,098
  1,196
  1,299
  1,406
  1,517
  1,633
  1,752
  1,877
  2,007
  2,141
  2,282
  2,428
  2,580
  2,738
  2,903
  3,075
  3,255
  3,443
Earnings before tax, $m
  1,330
  1,424
  1,637
  1,866
  2,112
  2,374
  2,651
  2,944
  3,251
  3,573
  3,910
  4,265
  4,631
  5,012
  5,408
  5,820
  6,248
  6,692
  7,154
  7,635
  8,134
  8,654
  9,194
  9,757
  10,343
  10,954
  11,591
  12,255
  12,948
  13,672
  14,428
Tax expense, $m
  417
  384
  442
  504
  570
  641
  716
  795
  878
  965
  1,056
  1,152
  1,250
  1,353
  1,460
  1,571
  1,687
  1,807
  1,932
  2,061
  2,196
  2,336
  2,482
  2,634
  2,793
  2,958
  3,130
  3,309
  3,496
  3,691
  3,896
Net income, $m
  912
  1,039
  1,195
  1,362
  1,542
  1,733
  1,935
  2,149
  2,373
  2,608
  2,854
  3,113
  3,381
  3,659
  3,948
  4,248
  4,561
  4,885
  5,223
  5,573
  5,938
  6,317
  6,712
  7,123
  7,550
  7,996
  8,461
  8,946
  9,452
  9,981
  10,532

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,330
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  15,362
  16,453
  19,082
  21,922
  24,968
  28,215
  31,658
  35,294
  39,118
  43,128
  47,323
  51,702
  56,267
  61,019
  65,962
  71,101
  76,442
  81,992
  87,760
  93,755
  99,988
  106,470
  113,215
  120,236
  127,548
  135,167
  143,109
  151,392
  160,036
  169,060
  178,484
Adjusted assets (=assets-cash), $m
  14,032
  16,453
  19,082
  21,922
  24,968
  28,215
  31,658
  35,294
  39,118
  43,128
  47,323
  51,702
  56,267
  61,019
  65,962
  71,101
  76,442
  81,992
  87,760
  93,755
  99,988
  106,470
  113,215
  120,236
  127,548
  135,167
  143,109
  151,392
  160,036
  169,060
  178,484
Revenue / Adjusted assets
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
Average production assets, $m
  215
  257
  298
  342
  389
  440
  494
  551
  610
  673
  738
  807
  878
  952
  1,029
  1,109
  1,192
  1,279
  1,369
  1,463
  1,560
  1,661
  1,766
  1,876
  1,990
  2,109
  2,232
  2,362
  2,497
  2,637
  2,784
Working capital, $m
  0
  -1,283
  -1,488
  -1,710
  -1,947
  -2,201
  -2,469
  -2,753
  -3,051
  -3,364
  -3,691
  -4,033
  -4,389
  -4,759
  -5,145
  -5,546
  -5,962
  -6,395
  -6,845
  -7,313
  -7,799
  -8,305
  -8,831
  -9,378
  -9,949
  -10,543
  -11,162
  -11,809
  -12,483
  -13,187
  -13,922
Total debt, $m
  6,276
  7,713
  9,275
  10,962
  12,771
  14,700
  16,745
  18,904
  21,176
  23,558
  26,050
  28,651
  31,362
  34,185
  37,121
  40,174
  43,347
  46,643
  50,069
  53,631
  57,333
  61,183
  65,190
  69,360
  73,704
  78,229
  82,947
  87,867
  93,001
  98,361
  103,960
Total liabilities, $m
  8,336
  9,773
  11,335
  13,022
  14,831
  16,760
  18,805
  20,964
  23,236
  25,618
  28,110
  30,711
  33,422
  36,245
  39,181
  42,234
  45,407
  48,703
  52,129
  55,691
  59,393
  63,243
  67,250
  71,420
  75,764
  80,289
  85,007
  89,927
  95,061
  100,421
  106,020
Total equity, $m
  7,026
  6,680
  7,747
  8,900
  10,137
  11,455
  12,853
  14,329
  15,882
  17,510
  19,213
  20,991
  22,844
  24,774
  26,781
  28,867
  31,035
  33,289
  35,631
  38,065
  40,595
  43,227
  45,965
  48,816
  51,785
  54,878
  58,102
  61,465
  64,975
  68,638
  72,465
Total liabilities and equity, $m
  15,362
  16,453
  19,082
  21,922
  24,968
  28,215
  31,658
  35,293
  39,118
  43,128
  47,323
  51,702
  56,266
  61,019
  65,962
  71,101
  76,442
  81,992
  87,760
  93,756
  99,988
  106,470
  113,215
  120,236
  127,549
  135,167
  143,109
  151,392
  160,036
  169,059
  178,485
Debt-to-equity ratio
  0.893
  1.150
  1.200
  1.230
  1.260
  1.280
  1.300
  1.320
  1.330
  1.350
  1.360
  1.360
  1.370
  1.380
  1.390
  1.390
  1.400
  1.400
  1.410
  1.410
  1.410
  1.420
  1.420
  1.420
  1.420
  1.430
  1.430
  1.430
  1.430
  1.430
  1.430
Adjusted equity ratio
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  912
  1,039
  1,195
  1,362
  1,542
  1,733
  1,935
  2,149
  2,373
  2,608
  2,854
  3,113
  3,381
  3,659
  3,948
  4,248
  4,561
  4,885
  5,223
  5,573
  5,938
  6,317
  6,712
  7,123
  7,550
  7,996
  8,461
  8,946
  9,452
  9,981
  10,532
Depreciation, amort., depletion, $m
  50
  30
  34
  38
  43
  48
  53
  59
  65
  71
  78
  81
  88
  95
  103
  111
  119
  128
  137
  146
  156
  166
  177
  188
  199
  211
  223
  236
  250
  264
  278
Funds from operations, $m
  -177
  1,069
  1,229
  1,401
  1,585
  1,781
  1,989
  2,208
  2,438
  2,680
  2,932
  3,194
  3,468
  3,754
  4,051
  4,359
  4,680
  5,013
  5,360
  5,720
  6,094
  6,483
  6,888
  7,310
  7,749
  8,207
  8,684
  9,182
  9,702
  10,244
  10,811
Change in working capital, $m
  -685
  -188
  -205
  -222
  -238
  -253
  -269
  -284
  -298
  -313
  -327
  -342
  -356
  -371
  -386
  -401
  -417
  -433
  -450
  -468
  -486
  -506
  -526
  -548
  -570
  -594
  -619
  -646
  -674
  -704
  -735
Cash from operations, $m
  508
  1,257
  1,434
  1,622
  1,822
  2,034
  2,257
  2,492
  2,737
  2,992
  3,259
  3,536
  3,824
  4,124
  4,436
  4,760
  5,097
  5,446
  5,810
  6,187
  6,580
  6,989
  7,415
  7,858
  8,320
  8,801
  9,304
  9,828
  10,376
  10,948
  11,546
Maintenance CAPEX, $m
  0
  -21
  -26
  -30
  -34
  -39
  -44
  -49
  -55
  -61
  -67
  -74
  -81
  -88
  -95
  -103
  -111
  -119
  -128
  -137
  -146
  -156
  -166
  -177
  -188
  -199
  -211
  -223
  -236
  -250
  -264
New CAPEX, $m
  -76
  -42
  -41
  -44
  -48
  -51
  -54
  -57
  -60
  -63
  -65
  -68
  -71
  -74
  -77
  -80
  -83
  -87
  -90
  -94
  -97
  -101
  -105
  -110
  -114
  -119
  -124
  -129
  -135
  -141
  -147
Cash from investing activities, $m
  -86
  -63
  -67
  -74
  -82
  -90
  -98
  -106
  -115
  -124
  -132
  -142
  -152
  -162
  -172
  -183
  -194
  -206
  -218
  -231
  -243
  -257
  -271
  -287
  -302
  -318
  -335
  -352
  -371
  -391
  -411
Free cash flow, $m
  422
  1,194
  1,367
  1,548
  1,741
  1,945
  2,160
  2,385
  2,622
  2,869
  3,126
  3,393
  3,673
  3,963
  4,264
  4,577
  4,902
  5,240
  5,592
  5,957
  6,337
  6,732
  7,143
  7,572
  8,018
  8,484
  8,969
  9,476
  10,005
  10,558
  11,135
Issuance/(repayment) of debt, $m
  -198
  1,437
  1,562
  1,687
  1,809
  1,929
  2,045
  2,159
  2,272
  2,382
  2,492
  2,601
  2,711
  2,823
  2,936
  3,053
  3,173
  3,297
  3,426
  3,561
  3,702
  3,851
  4,006
  4,170
  4,343
  4,525
  4,718
  4,920
  5,134
  5,360
  5,598
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -216
  1,437
  1,562
  1,687
  1,809
  1,929
  2,045
  2,159
  2,272
  2,382
  2,492
  2,601
  2,711
  2,823
  2,936
  3,053
  3,173
  3,297
  3,426
  3,561
  3,702
  3,851
  4,006
  4,170
  4,343
  4,525
  4,718
  4,920
  5,134
  5,360
  5,598
Total cash flow (excl. dividends), $m
  206
  2,631
  2,929
  3,235
  3,550
  3,873
  4,205
  4,545
  4,893
  5,251
  5,618
  5,995
  6,384
  6,785
  7,200
  7,630
  8,075
  8,537
  9,018
  9,518
  10,039
  10,582
  11,150
  11,742
  12,361
  13,009
  13,687
  14,396
  15,139
  15,918
  16,733
Retained Cash Flow (-), $m
  -1,377
  -984
  -1,067
  -1,153
  -1,237
  -1,318
  -1,398
  -1,476
  -1,553
  -1,628
  -1,703
  -1,778
  -1,853
  -1,929
  -2,007
  -2,086
  -2,168
  -2,253
  -2,342
  -2,434
  -2,531
  -2,632
  -2,738
  -2,851
  -2,969
  -3,093
  -3,225
  -3,363
  -3,509
  -3,664
  -3,826
Prev. year cash balance distribution, $m
 
  1,330
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,977
  1,861
  2,082
  2,313
  2,555
  2,807
  3,069
  3,341
  3,623
  3,915
  4,217
  4,531
  4,856
  5,193
  5,543
  5,907
  6,284
  6,676
  7,084
  7,508
  7,951
  8,411
  8,892
  9,393
  9,916
  10,462
  11,033
  11,630
  12,254
  12,907
Discount rate, %
 
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.12
  16.93
  17.78
  18.67
  19.60
  20.58
  21.61
  22.69
  23.82
  25.01
  26.26
  27.58
PV of cash for distribution, $m
 
  2,790
  1,625
  1,681
  1,716
  1,727
  1,716
  1,681
  1,625
  1,549
  1,456
  1,349
  1,232
  1,109
  982
  856
  733
  617
  510
  414
  329
  256
  195
  145
  105
  75
  51
  34
  22
  14
  9
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Lennar Corporation, together with its subsidiaries, engages in the homebuilding activities in the United States. The company operates through Homebuilding East, Homebuilding Central, Homebuilding West, Lennar Financial Services, Rialto, and Lennar Multifamily segments. Its homebuilding activities primarily include the construction and sale of single-family attached and detached homes to first-time, move-up, and active adult homebuyers, as well as the purchase, development, and sale of residential land. The company also offers real estate related financial services, including mortgage financing, title insurance, and closing services for home buyers and others, as well as personal lines, property, and casualty insurance products. In addition, it is involved in raising, investing, and managing third party capital; and originating and selling into securitizations commercial mortgage loans, as well as investing in real estate related mortgage loans, properties, and related securities. Further, the company sponsors, invests, and manages private equity vehicles, and provides asset management and other services to the vehicles and other third parties. Additionally, the company develops multifamily rental properties. Lennar Corporation was founded in 1954 and is based in Miami, Florida.

FINANCIAL RATIOS  of  Lennar Cl A (LEN)

Valuation Ratios
P/E Ratio 13.3
Price to Sales 1.1
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 23.9
Price to Free Cash Flow 28.2
Growth Rates
Sales Growth Rate 15.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -16.5%
Cap. Spend. - 3 Yr. Gr. Rate 56.9%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 89.3%
Total Debt to Equity 89.3%
Interest Coverage 21
Management Effectiveness
Return On Assets 6.4%
Ret/ On Assets - 3 Yr. Avg. 6.1%
Return On Total Capital 7.1%
Ret/ On T. Cap. - 3 Yr. Avg. 6.8%
Return On Equity 14.4%
Return On Equity - 3 Yr. Avg. 14.6%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 13.7%
Gross Margin - 3 Yr. Avg. 13.8%
EBITDA Margin 13.2%
EBITDA Margin - 3 Yr. Avg. 13.7%
Operating Margin 12.1%
Oper. Margin - 3 Yr. Avg. 12.5%
Pre-Tax Margin 12.1%
Pre-Tax Margin - 3 Yr. Avg. 12.5%
Net Profit Margin 8.3%
Net Profit Margin - 3 Yr. Avg. 8.3%
Effective Tax Rate 31.4%
Eff/ Tax Rate - 3 Yr. Avg. 32.9%
Payout Ratio 3.8%

LEN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LEN stock intrinsic value calculation we used $10950 million for the last fiscal year's total revenue generated by Lennar Cl A. The default revenue input number comes from 2016 income statement of Lennar Cl A. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our LEN stock valuation model: a) initial revenue growth rate of 17.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.7%, whose default value for LEN is calculated based on our internal credit rating of Lennar Cl A, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Lennar Cl A.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of LEN stock the variable cost ratio is equal to 87.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for LEN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Lennar Cl A.

Corporate tax rate of 27% is the nominal tax rate for Lennar Cl A. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the LEN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for LEN are equal to 2%.

Life of production assets of 10 years is the average useful life of capital assets used in Lennar Cl A operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for LEN is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $7026 million for Lennar Cl A - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 223.555 million for Lennar Cl A is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Lennar Cl A at the current share price and the inputted number of shares is $11.6 billion.

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COMPANY NEWS

▶ Pay Attention to These Cracks in the Housing Sector   [Aug-18-17 12:10PM  InvestorPlace]
▶ Lennar Corp. Value Analysis (NYSE:LEN) : August 14, 2017   [Aug-14-17 05:57PM  Capital Cube]
▶ 3 US cities where construction jobs are booming   [Aug-10-17 03:47PM  Yahoo Finance]
▶ LMC Announces Muse Apartments in Phoenix   [Aug-01-17 11:07AM  PR Newswire]
▶ As Homebuilders Wrap Up Earnings Season, 3 Key Names Yet To Report   [Jul-31-17 07:00PM  Investor's Business Daily]
▶ U.S. home sales stumble as prices hit record high   [Jul-24-17 12:57PM  Reuters]
▶ Third Avenue Value Fund's 2nd Quarter Portfolio Commentary   [Jul-21-17 07:28PM  GuruFocus.com]
▶ Housing Stocks Could Blow Over Soon for a Number of Reasons   [Jul-15-17 03:11PM  TheStreet.com]
▶ LMC Announces Opening of Nexa Apartments in Tempe   [Jul-11-17 05:07PM  PR Newswire]
▶ This Top-Ranked Industry Just Got A Slew Of Stock Rating Upgrades   [Jul-10-17 04:26PM  Investor's Business Daily]
▶ Mizuho Cuts KB Home, PulteGroup To Sell   [09:58AM  Barrons.com]
▶ ETFs with exposure to Lennar Corp. : July 5, 2017   [Jul-05-17 12:54PM  Capital Cube]
▶ Is Lennar a Suitable Stock for Value Investors?   [Jun-30-17 09:45AM  Zacks]
▶ Lennar Corporation Declares Quarterly Dividends   [Jun-28-17 04:30PM  PR Newswire]
▶ KB Home Earnings, Revenue Beat As These 4 Builders Near Buy Points   [Jun-27-17 04:54PM  Investor's Business Daily]
▶ How Much Farther Can KB Home (KBH) Stock REALLY Go?   [Jun-26-17 03:12PM  InvestorPlace]
▶ Company News for June 21, 2017   [10:37AM  Zacks]
▶ Earnings Calendar, Analyst Estimates And Stocks To Watch   [09:47AM  Investor's Business Daily]
▶ Lennar beats Street 2Q forecasts   [Jun-20-17 09:26PM  Associated Press]
▶ Lennar Earnings Top Q2 Views But Shares Can't Hold Buy Point   [05:05PM  Investor's Business Daily]
▶ What Happened in the Stock Market Today   [04:57PM  Motley Fool]
▶ Stock Indexes Dip, But Homebuilders Post New Highs   [12:06PM  Investor's Business Daily]
▶ Story Stocks from Briefing.com   [11:54AM  Briefing.com]
▶ Swinerton tops out Shift Tower in San Diego   [12:04PM  GlobeNewswire]
▶ As Hawkish Fed Hits Housing, Fannie Mae Eases Mortgage Standards   [Jun-15-17 04:15PM  Investor's Business Daily]
▶ Beazer Homes: Time To Hit The Buy Button?   [09:54AM  Barrons.com]
▶ Breakout Watch: Top Homebuilder Stock Still Just With Buy Range   [Jun-14-17 04:40PM  Investor's Business Daily]
▶ Lennar to build homes integrated with Amazon Alexa   [12:55PM  American City Business Journals]
▶ 11 Best Growth Company Stocks To Buy Now   [Jun-12-17 12:11PM  Insider Monkey]
▶ These Hidden Value Stocks are Hot in 2017   [Jun-07-17 04:15PM  Zacks]
▶ [$$] The Roundup   [Jun-05-17 09:51AM  The Wall Street Journal]
▶ This week's episode of our Structures podcast takes on Oakland's building boom   [May-31-17 05:20PM  American City Business Journals]
Stock chart of LEN Financial statements of LEN
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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