Intrinsic value of Lennar Cl A - LEN

Previous Close

$50.99

  Intrinsic Value

$113.93

stock screener

  Rating & Target

str. buy

+123%

Previous close

$50.99

 
Intrinsic value

$113.93

 
Up/down potential

+123%

 
Rating

str. buy

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 2017), $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 12.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  15.50
  14.45
  13.51
  12.65
  11.89
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.30
  7.97
  7.67
  7.40
  7.16
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.49
Revenue, $m
  14,606
  16,717
  18,974
  21,375
  23,917
  26,595
  29,409
  32,357
  35,437
  38,650
  41,998
  45,482
  49,105
  52,870
  56,784
  60,851
  65,077
  69,471
  74,039
  78,791
  83,737
  88,885
  94,249
  99,838
  105,666
  111,746
  118,092
  124,717
  131,638
  138,871
Variable operating expenses, $m
  12,917
  14,775
  16,762
  18,875
  21,112
  23,470
  25,947
  28,541
  31,253
  34,081
  36,967
  40,034
  43,223
  46,537
  49,982
  53,562
  57,282
  61,149
  65,170
  69,353
  73,706
  78,238
  82,959
  87,879
  93,009
  98,361
  103,946
  109,778
  115,870
  122,237
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
  12,917
  14,775
  16,762
  18,875
  21,112
  23,470
  25,947
  28,541
  31,253
  34,081
  36,967
  40,034
  43,223
  46,537
  49,982
  53,562
  57,282
  61,149
  65,170
  69,353
  73,706
  78,238
  82,959
  87,879
  93,009
  98,361
  103,946
  109,778
  115,870
  122,237
Operating income, $m
  1,689
  1,942
  2,212
  2,500
  2,804
  3,125
  3,462
  3,815
  4,184
  4,569
  5,031
  5,448
  5,882
  6,333
  6,802
  7,289
  7,795
  8,321
  8,869
  9,438
  10,030
  10,647
  11,290
  11,959
  12,657
  13,385
  14,145
  14,939
  15,768
  16,635
EBITDA, $m
  3,781
  4,328
  4,912
  5,534
  6,192
  6,885
  7,614
  8,377
  9,174
  10,006
  10,873
  11,775
  12,712
  13,687
  14,700
  15,753
  16,847
  17,985
  19,168
  20,398
  21,678
  23,011
  24,399
  25,847
  27,355
  28,929
  30,572
  32,287
  34,079
  35,952
Interest expense (income), $m
  67
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
Earnings before tax, $m
  1,640
  1,893
  2,164
  2,451
  2,756
  3,077
  3,414
  3,767
  4,136
  4,521
  4,982
  5,399
  5,833
  6,284
  6,753
  7,240
  7,747
  8,273
  8,820
  9,389
  9,982
  10,598
  11,241
  11,910
  12,609
  13,337
  14,097
  14,890
  15,720
  16,586
Tax expense, $m
  443
  511
  584
  662
  744
  831
  922
  1,017
  1,117
  1,221
  1,345
  1,458
  1,575
  1,697
  1,823
  1,955
  2,092
  2,234
  2,381
  2,535
  2,695
  2,862
  3,035
  3,216
  3,404
  3,601
  3,806
  4,020
  4,244
  4,478
Net income, $m
  1,198
  1,382
  1,579
  1,789
  2,012
  2,246
  2,492
  2,750
  3,019
  3,300
  3,637
  3,942
  4,258
  4,588
  4,930
  5,285
  5,655
  6,039
  6,439
  6,854
  7,287
  7,737
  8,206
  8,695
  9,204
  9,736
  10,291
  10,870
  11,475
  12,108

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  -6,952
  -7,957
  -9,031
  -10,174
  -11,384
  -12,658
  -13,998
  -15,401
  -16,867
  -18,396
  -19,990
  -21,648
  -23,372
  -25,164
  -27,027
  -28,963
  -30,974
  -33,066
  -35,240
  -37,502
  -39,856
  -42,306
  -44,859
  -47,519
  -50,293
  -53,187
  -56,207
  -59,361
  -62,655
  -66,098
Adjusted assets (=assets-cash), $m
  -6,952
  -7,957
  -9,031
  -10,174
  -11,384
  -12,658
  -13,998
  -15,401
  -16,867
  -18,396
  -19,990
  -21,648
  -23,372
  -25,164
  -27,027
  -28,963
  -30,974
  -33,066
  -35,240
  -37,502
  -39,856
  -42,306
  -44,859
  -47,519
  -50,293
  -53,187
  -56,207
  -59,361
  -62,655
  -66,098
Revenue / Adjusted assets
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
  -2.101
Average production assets, $m
  20,317
  23,253
  26,393
  29,733
  33,268
  36,994
  40,908
  45,008
  49,293
  53,763
  58,419
  63,265
  68,305
  73,543
  78,986
  84,643
  90,522
  96,634
  102,988
  109,598
  116,477
  123,640
  131,100
  138,875
  146,982
  155,439
  164,265
  173,482
  183,109
  193,170
Working capital, $m
  -12,269
  -14,042
  -15,938
  -17,955
  -20,090
  -22,340
  -24,704
  -27,180
  -29,767
  -32,466
  -35,278
  -38,205
  -41,248
  -44,411
  -47,698
  -51,115
  -54,665
  -58,355
  -62,193
  -66,185
  -70,339
  -74,664
  -79,169
  -83,864
  -88,760
  -93,867
  -99,197
  -104,762
  -110,576
  -116,652
Total debt, $m
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
  901
Total liabilities, $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 equity, $m
  -6,952
  -7,957
  -9,031
  -10,174
  -11,384
  -12,658
  -13,998
  -15,401
  -16,867
  -18,396
  -19,990
  -21,648
  -23,372
  -25,164
  -27,027
  -28,963
  -30,974
  -33,066
  -35,240
  -37,502
  -39,856
  -42,306
  -44,859
  -47,519
  -50,293
  -53,187
  -56,207
  -59,361
  -62,655
  -66,098
Total liabilities and equity, $m
  -6,952
  -7,957
  -9,031
  -10,174
  -11,384
  -12,658
  -13,998
  -15,401
  -16,867
  -18,396
  -19,990
  -21,648
  -23,372
  -25,164
  -27,027
  -28,963
  -30,974
  -33,066
  -35,240
  -37,502
  -39,856
  -42,306
  -44,859
  -47,519
  -50,293
  -53,187
  -56,207
  -59,361
  -62,655
  -66,098
Debt-to-equity ratio
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
Adjusted equity ratio
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,198
  1,382
  1,579
  1,789
  2,012
  2,246
  2,492
  2,750
  3,019
  3,300
  3,637
  3,942
  4,258
  4,588
  4,930
  5,285
  5,655
  6,039
  6,439
  6,854
  7,287
  7,737
  8,206
  8,695
  9,204
  9,736
  10,291
  10,870
  11,475
  12,108
Depreciation, amort., depletion, $m
  2,092
  2,386
  2,700
  3,034
  3,387
  3,760
  4,151
  4,561
  4,990
  5,437
  5,842
  6,327
  6,830
  7,354
  7,899
  8,464
  9,052
  9,663
  10,299
  10,960
  11,648
  12,364
  13,110
  13,888
  14,698
  15,544
  16,427
  17,348
  18,311
  19,317
Funds from operations, $m
  3,290
  3,768
  4,279
  4,823
  5,399
  6,006
  6,643
  7,311
  8,009
  8,737
  9,479
  10,268
  11,089
  11,942
  12,828
  13,750
  14,707
  15,703
  16,737
  17,814
  18,934
  20,101
  21,316
  22,582
  23,902
  25,280
  26,717
  28,218
  29,786
  31,425
Change in working capital, $m
  -1,647
  -1,773
  -1,896
  -2,017
  -2,135
  -2,250
  -2,364
  -2,476
  -2,587
  -2,699
  -2,812
  -2,926
  -3,043
  -3,163
  -3,287
  -3,416
  -3,550
  -3,690
  -3,837
  -3,992
  -4,154
  -4,325
  -4,505
  -4,695
  -4,896
  -5,107
  -5,330
  -5,566
  -5,814
  -6,076
Cash from operations, $m
  4,936
  5,541
  6,176
  6,840
  7,534
  8,256
  9,007
  9,787
  10,596
  11,436
  12,291
  13,194
  14,132
  15,105
  16,116
  17,166
  18,257
  19,393
  20,575
  21,806
  23,088
  24,426
  25,821
  27,277
  28,798
  30,387
  32,047
  33,784
  35,600
  37,500
Maintenance CAPEX, $m
  -1,760
  -2,032
  -2,325
  -2,639
  -2,973
  -3,327
  -3,699
  -4,091
  -4,501
  -4,929
  -5,376
  -5,842
  -6,327
  -6,830
  -7,354
  -7,899
  -8,464
  -9,052
  -9,663
  -10,299
  -10,960
  -11,648
  -12,364
  -13,110
  -13,888
  -14,698
  -15,544
  -16,427
  -17,348
  -18,311
New CAPEX, $m
  -2,722
  -2,936
  -3,140
  -3,340
  -3,535
  -3,726
  -3,914
  -4,100
  -4,285
  -4,470
  -4,656
  -4,846
  -5,039
  -5,238
  -5,444
  -5,657
  -5,879
  -6,111
  -6,355
  -6,610
  -6,879
  -7,162
  -7,460
  -7,775
  -8,107
  -8,457
  -8,826
  -9,216
  -9,627
  -10,061
Cash from investing activities, $m
  -4,482
  -4,968
  -5,465
  -5,979
  -6,508
  -7,053
  -7,613
  -8,191
  -8,786
  -9,399
  -10,032
  -10,688
  -11,366
  -12,068
  -12,798
  -13,556
  -14,343
  -15,163
  -16,018
  -16,909
  -17,839
  -18,810
  -19,824
  -20,885
  -21,995
  -23,155
  -24,370
  -25,643
  -26,975
  -28,372
Free cash flow, $m
  455
  573
  710
  861
  1,025
  1,203
  1,393
  1,596
  1,811
  2,037
  2,258
  2,507
  2,766
  3,036
  3,318
  3,610
  3,914
  4,230
  4,557
  4,897
  5,250
  5,616
  5,997
  6,392
  6,804
  7,232
  7,677
  8,141
  8,624
  9,128
Issuance/(repayment) of debt, $m
  1
  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
Issuance/(repurchase) of shares, $m
  -933
  -1,005
  -1,075
  -1,143
  -1,210
  -1,275
  -1,339
  -1,403
  -1,466
  -1,529
  -1,593
  -1,658
  -1,724
  -1,792
  -1,863
  -1,936
  -2,012
  -2,091
  -2,174
  -2,262
  -2,354
  -2,451
  -2,553
  -2,660
  -2,774
  -2,894
  -3,020
  -3,154
  -3,294
  -3,443
Cash from financing (excl. dividends), $m  
  -932
  -1,005
  -1,075
  -1,143
  -1,210
  -1,275
  -1,339
  -1,403
  -1,466
  -1,529
  -1,593
  -1,658
  -1,724
  -1,792
  -1,863
  -1,936
  -2,012
  -2,091
  -2,174
  -2,262
  -2,354
  -2,451
  -2,553
  -2,660
  -2,774
  -2,894
  -3,020
  -3,154
  -3,294
  -3,443
Total cash flow (excl. dividends), $m
  -477
  -431
  -364
  -282
  -184
  -72
  54
  193
  345
  507
  665
  848
  1,042
  1,244
  1,455
  1,675
  1,902
  2,138
  2,383
  2,635
  2,896
  3,165
  3,444
  3,732
  4,030
  4,338
  4,657
  4,987
  5,330
  5,686
Retained Cash Flow (-), $m
  933
  1,005
  1,075
  1,143
  1,210
  1,275
  1,339
  1,403
  1,466
  1,529
  1,593
  1,658
  1,724
  1,792
  1,863
  1,936
  2,012
  2,091
  2,174
  2,262
  2,354
  2,451
  2,553
  2,660
  2,774
  2,894
  3,020
  3,154
  3,294
  3,443
Prev. year cash balance distribution, $m
  6,019
  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
  63
  0
  0
  0
  0
  0
  133
  147
  162
  177
  193
  210
  227
  246
  264
  284
  304
  325
  347
  370
  394
  419
  444
  471
  499
  528
  559
  590
  624
  658
Cash available for distribution, $m
  6,475
  1,005
  1,075
  1,143
  1,210
  1,275
  1,393
  1,596
  1,811
  2,037
  2,258
  2,507
  2,766
  3,036
  3,318
  3,610
  3,914
  4,230
  4,557
  4,897
  5,250
  5,616
  5,997
  6,392
  6,804
  7,232
  7,677
  8,141
  8,624
  9,128
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  6,208
  920
  935
  941
  938
  925
  941
  998
  1,040
  1,068
  1,072
  1,070
  1,052
  1,019
  974
  917
  852
  779
  702
  622
  543
  466
  393
  326
  265
  211
  165
  126
  94
  69
Current shareholders' claim on cash, %
  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 is a provider of real estate related financial services, commercial real estate, investment management and finance company. The Company is a homebuilder that operates in various states. Its segments include Homebuilding East, Homebuilding Central, Homebuilding West, Lennar Financial Services, Rialto and Lennar Multifamily. It is a developer of multifamily rental properties. Its Homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development and sale of residential land. It operates primarily under the Lennar brand name. The Lennar Financial Services segment includes mortgage financing, title insurance and closing services for both buyers of its homes and others. The Rialto segment is a real estate, investment management, and finance company. The Lennar Multifamily segment focuses on developing a portfolio of institutional multifamily rental properties in the United States markets.

FINANCIAL RATIOS  of  Lennar Cl A (LEN)

Valuation Ratios
P/E Ratio 13.1
Price to Sales 1.1
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 23.6
Price to Free Cash Flow 27.7
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 $12646 million for the last fiscal year's total revenue generated by Lennar Cl A. The default revenue input number comes from 2017 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 15.5% 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 4.3%, 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 88.5%.

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 5.4% 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 0.5%.

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 139.1%.

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 -84%. 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 - $0 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 235 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 $12.0 billion.

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COMPANY NEWS

▶ Opendoor expands home-buying service into Sacramento, Portland and Denver   [Aug-15-18 03:28PM  American City Business Journals]
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▶ 3 Smart-Home Stocks to Buy for the IOT Boom   [Aug-10-18 12:30PM  InvestorPlace]
▶ 3 Value Plays That Wont Cut Investors   [01:44PM  InvestorPlace]
▶ New Opendoor, Lennar partnership to boost each's market share in Charlotte   [Aug-01-18 03:00PM  American City Business Journals]
▶ Lennar Breaks Ground On Levity At Tustin Legacy   [Jul-31-18 06:07PM  PR Newswire]
▶ What a housing slowdown means in a strong economy   [Jul-27-18 01:06PM  Yahoo Finance Video]
▶ LMC Announces Start of Leasing at Capitol 650   [Jul-26-18 11:07AM  PR Newswire]
▶ LMC Announces Start of Construction of Gentry Apartments   [Jul-24-18 08:15AM  PR Newswire]
▶ These are the best (and worst) places to retire   [01:23PM  Yahoo Finance Video]
▶ Lennar planning roughly 200 homes at site of former Prince residence   [Jul-11-18 03:59PM  American City Business Journals]
▶ Lennar Corporation Declares Quarterly Dividends   [Jun-27-18 04:30PM  PR Newswire]
▶ Lennar chairman touts investment in Opendoor to sell homes   [01:28PM  American City Business Journals]
▶ Company News For Jun 27, 2018   [10:47AM  Zacks]
▶ 3 Plays to Ride the Housing and Labor Shortage Waves   [Jun-26-18 09:00PM  TheStreet.com]
▶ Lennar Stock Leaps on Earnings Beat   [12:51PM  InvestorPlace]
▶ Lennar profit soars, crushing estimates   [10:43AM  Reuters Videos]
▶ WBA Replaces GE In The Dow   [10:33AM  Zacks]
▶ Lennar: Fiscal 2Q Earnings Snapshot   [06:15AM  Associated Press]
▶ Homebuilder John Reynen dies at 80   [04:22PM  American City Business Journals]
▶ Cramer's game plan on Trump's trade talk   [05:28PM  CNBC Videos]
▶ Developers, including Lennar, seek to rezone 5 properties in Miami-Dade   [10:02AM  American City Business Journals]
▶ Final Trade: TLT, LEN & more   [Jun-15-18 05:30PM  CNBC Videos]
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