Intrinsic value of Lennar Cl A - LEN

Previous Close

$62.18

  Intrinsic Value

$104.44

stock screener

  Rating & Target

str. buy

+68%

Previous close

$62.18

 
Intrinsic value

$104.44

 
Up/down potential

+68%

 
Rating

str. buy

*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 14.3

 

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
  15.10
  14.09
  13.18
  12.36
  11.63
  10.96
  10.37
  9.83
  9.35
  8.91
  8.52
  8.17
  7.85
  7.57
  7.31
  7.08
  6.87
  6.68
  6.52
  6.36
  6.23
  6.11
  5.99
  5.90
  5.81
  5.73
  5.65
  5.59
  5.53
  5.48
Revenue, $m
  10,950
  12,603
  14,379
  16,275
  18,287
  20,413
  22,651
  24,999
  27,457
  30,023
  32,699
  35,486
  38,385
  41,399
  44,532
  47,787
  51,170
  54,687
  58,342
  62,144
  66,099
  70,215
  74,502
  78,968
  83,623
  88,478
  93,544
  98,831
  104,353
  110,122
  116,152
Variable operating expenses, $m
 
  10,990
  12,537
  14,190
  15,943
  17,796
  19,747
  21,794
  23,936
  26,173
  28,506
  30,931
  33,458
  36,085
  38,815
  41,653
  44,602
  47,667
  50,853
  54,166
  57,614
  61,202
  64,938
  68,831
  72,889
  77,121
  81,536
  86,145
  90,958
  95,987
  101,243
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
  10,990
  12,537
  14,190
  15,943
  17,796
  19,747
  21,794
  23,936
  26,173
  28,506
  30,931
  33,458
  36,085
  38,815
  41,653
  44,602
  47,667
  50,853
  54,166
  57,614
  61,202
  64,938
  68,831
  72,889
  77,121
  81,536
  86,145
  90,958
  95,987
  101,243
Operating income, $m
  1,330
  1,614
  1,842
  2,085
  2,343
  2,616
  2,904
  3,205
  3,520
  3,850
  4,193
  4,555
  4,927
  5,314
  5,716
  6,134
  6,568
  7,020
  7,489
  7,977
  8,485
  9,013
  9,563
  10,137
  10,734
  11,358
  12,008
  12,686
  13,395
  14,136
  14,910
EBITDA, $m
  1,380
  1,667
  1,902
  2,153
  2,419
  2,700
  2,996
  3,307
  3,632
  3,972
  4,326
  4,694
  5,078
  5,477
  5,891
  6,322
  6,769
  7,234
  7,718
  8,221
  8,744
  9,289
  9,856
  10,446
  11,062
  11,704
  12,375
  13,074
  13,805
  14,568
  15,365
Interest expense (income), $m
  67
  220
  264
  311
  362
  415
  472
  532
  594
  660
  728
  799
  874
  951
  1,031
  1,115
  1,202
  1,292
  1,386
  1,483
  1,584
  1,690
  1,799
  1,914
  2,033
  2,157
  2,286
  2,421
  2,562
  2,709
  2,863
Earnings before tax, $m
  1,330
  1,394
  1,578
  1,774
  1,982
  2,201
  2,432
  2,673
  2,926
  3,190
  3,465
  3,756
  4,054
  4,363
  4,685
  5,019
  5,367
  5,728
  6,104
  6,494
  6,901
  7,324
  7,764
  8,223
  8,702
  9,201
  9,722
  10,265
  10,833
  11,427
  12,047
Tax expense, $m
  417
  376
  426
  479
  535
  594
  657
  722
  790
  861
  936
  1,014
  1,094
  1,178
  1,265
  1,355
  1,449
  1,547
  1,648
  1,753
  1,863
  1,977
  2,096
  2,220
  2,349
  2,484
  2,625
  2,772
  2,925
  3,085
  3,253
Net income, $m
  912
  1,018
  1,152
  1,295
  1,447
  1,607
  1,775
  1,952
  2,136
  2,329
  2,530
  2,742
  2,959
  3,185
  3,420
  3,664
  3,918
  4,181
  4,456
  4,741
  5,037
  5,346
  5,668
  6,003
  6,352
  6,717
  7,097
  7,494
  7,908
  8,341
  8,794

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
  16,158
  18,435
  20,865
  23,444
  26,170
  29,039
  32,050
  35,201
  38,491
  41,922
  45,495
  49,211
  53,076
  57,092
  61,266
  65,603
  70,111
  74,797
  79,671
  84,742
  90,019
  95,515
  101,241
  107,209
  113,434
  119,928
  126,707
  133,786
  141,183
  148,913
Adjusted assets (=assets-cash), $m
  14,032
  16,158
  18,435
  20,865
  23,444
  26,170
  29,039
  32,050
  35,201
  38,491
  41,922
  45,495
  49,211
  53,076
  57,092
  61,266
  65,603
  70,111
  74,797
  79,671
  84,742
  90,019
  95,515
  101,241
  107,209
  113,434
  119,928
  126,707
  133,786
  141,183
  148,913
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
  252
  288
  325
  366
  408
  453
  500
  549
  600
  654
  710
  768
  828
  891
  956
  1,023
  1,094
  1,167
  1,243
  1,322
  1,404
  1,490
  1,579
  1,672
  1,770
  1,871
  1,977
  2,087
  2,202
  2,323
Working capital, $m
  0
  -1,525
  -1,740
  -1,969
  -2,213
  -2,470
  -2,741
  -3,025
  -3,322
  -3,633
  -3,957
  -4,294
  -4,645
  -5,009
  -5,388
  -5,782
  -6,192
  -6,617
  -7,059
  -7,519
  -7,998
  -8,496
  -9,015
  -9,555
  -10,118
  -10,706
  -11,319
  -11,959
  -12,627
  -13,325
  -14,054
Total debt, $m
  6,276
  7,538
  8,890
  10,334
  11,866
  13,485
  15,189
  16,978
  18,849
  20,804
  22,842
  24,964
  27,171
  29,467
  31,853
  34,332
  36,908
  39,586
  42,370
  45,265
  48,277
  51,412
  54,676
  58,077
  61,622
  65,320
  69,177
  73,204
  77,409
  81,803
  86,395
Total liabilities, $m
  8,336
  9,598
  10,950
  12,394
  13,926
  15,545
  17,249
  19,038
  20,909
  22,864
  24,902
  27,024
  29,231
  31,527
  33,913
  36,392
  38,968
  41,646
  44,430
  47,325
  50,337
  53,472
  56,736
  60,137
  63,682
  67,380
  71,237
  75,264
  79,469
  83,863
  88,455
Total equity, $m
  7,026
  6,560
  7,485
  8,471
  9,518
  10,625
  11,790
  13,012
  14,292
  15,628
  17,020
  18,471
  19,980
  21,549
  23,179
  24,874
  26,635
  28,465
  30,368
  32,347
  34,405
  36,548
  38,779
  41,104
  43,527
  46,054
  48,691
  51,443
  54,317
  57,320
  60,459
Total liabilities and equity, $m
  15,362
  16,158
  18,435
  20,865
  23,444
  26,170
  29,039
  32,050
  35,201
  38,492
  41,922
  45,495
  49,211
  53,076
  57,092
  61,266
  65,603
  70,111
  74,798
  79,672
  84,742
  90,020
  95,515
  101,241
  107,209
  113,434
  119,928
  126,707
  133,786
  141,183
  148,914
Debt-to-equity ratio
  0.893
  1.150
  1.190
  1.220
  1.250
  1.270
  1.290
  1.300
  1.320
  1.330
  1.340
  1.350
  1.360
  1.370
  1.370
  1.380
  1.390
  1.390
  1.400
  1.400
  1.400
  1.410
  1.410
  1.410
  1.420
  1.420
  1.420
  1.420
  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
  1,018
  1,152
  1,295
  1,447
  1,607
  1,775
  1,952
  2,136
  2,329
  2,530
  2,742
  2,959
  3,185
  3,420
  3,664
  3,918
  4,181
  4,456
  4,741
  5,037
  5,346
  5,668
  6,003
  6,352
  6,717
  7,097
  7,494
  7,908
  8,341
  8,794
Depreciation, amort., depletion, $m
  50
  53
  60
  68
  76
  84
  93
  102
  112
  122
  132
  139
  151
  162
  175
  187
  201
  214
  229
  244
  259
  275
  292
  310
  328
  347
  367
  388
  409
  432
  455
Funds from operations, $m
  -177
  1,071
  1,212
  1,363
  1,522
  1,691
  1,868
  2,054
  2,248
  2,451
  2,662
  2,881
  3,110
  3,347
  3,595
  3,852
  4,118
  4,396
  4,684
  4,984
  5,297
  5,622
  5,960
  6,313
  6,680
  7,064
  7,464
  7,881
  8,317
  8,773
  9,250
Change in working capital, $m
  -685
  -200
  -215
  -229
  -243
  -257
  -271
  -284
  -297
  -311
  -324
  -337
  -351
  -365
  -379
  -394
  -409
  -425
  -442
  -460
  -479
  -498
  -519
  -540
  -563
  -587
  -613
  -640
  -668
  -698
  -730
Cash from operations, $m
  508
  1,271
  1,427
  1,592
  1,766
  1,948
  2,139
  2,338
  2,545
  2,761
  2,986
  3,218
  3,460
  3,712
  3,974
  4,245
  4,528
  4,821
  5,127
  5,444
  5,775
  6,120
  6,479
  6,853
  7,243
  7,651
  8,077
  8,521
  8,986
  9,471
  9,979
Maintenance CAPEX, $m
  0
  -42
  -49
  -56
  -64
  -72
  -80
  -89
  -98
  -108
  -118
  -128
  -139
  -151
  -162
  -175
  -187
  -201
  -214
  -229
  -244
  -259
  -275
  -292
  -310
  -328
  -347
  -367
  -388
  -409
  -432
New CAPEX, $m
  -76
  -38
  -36
  -38
  -40
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -58
  -60
  -63
  -65
  -68
  -70
  -73
  -76
  -79
  -82
  -86
  -89
  -93
  -97
  -101
  -106
  -110
  -115
  -121
Cash from investing activities, $m
  -86
  -80
  -85
  -94
  -104
  -115
  -125
  -136
  -147
  -159
  -172
  -184
  -197
  -211
  -225
  -240
  -255
  -271
  -287
  -305
  -323
  -341
  -361
  -381
  -403
  -425
  -448
  -473
  -498
  -524
  -553
Free cash flow, $m
  422
  1,192
  1,342
  1,498
  1,662
  1,834
  2,014
  2,202
  2,398
  2,602
  2,814
  3,034
  3,263
  3,501
  3,749
  4,006
  4,273
  4,550
  4,839
  5,140
  5,452
  5,778
  6,118
  6,471
  6,841
  7,226
  7,628
  8,048
  8,488
  8,947
  9,427
Issuance/(repayment) of debt, $m
  -198
  1,262
  1,352
  1,443
  1,532
  1,619
  1,704
  1,788
  1,872
  1,955
  2,038
  2,122
  2,208
  2,295
  2,386
  2,479
  2,576
  2,678
  2,784
  2,895
  3,012
  3,135
  3,265
  3,401
  3,545
  3,697
  3,858
  4,027
  4,205
  4,394
  4,592
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
  1,262
  1,352
  1,443
  1,532
  1,619
  1,704
  1,788
  1,872
  1,955
  2,038
  2,122
  2,208
  2,295
  2,386
  2,479
  2,576
  2,678
  2,784
  2,895
  3,012
  3,135
  3,265
  3,401
  3,545
  3,697
  3,858
  4,027
  4,205
  4,394
  4,592
Total cash flow (excl. dividends), $m
  206
  2,454
  2,695
  2,941
  3,194
  3,453
  3,718
  3,990
  4,270
  4,557
  4,852
  5,156
  5,471
  5,797
  6,134
  6,485
  6,849
  7,228
  7,623
  8,035
  8,464
  8,913
  9,382
  9,873
  10,386
  10,923
  11,486
  12,075
  12,693
  13,340
  14,019
Retained Cash Flow (-), $m
  -1,377
  -864
  -924
  -987
  -1,047
  -1,107
  -1,165
  -1,222
  -1,279
  -1,336
  -1,393
  -1,450
  -1,509
  -1,569
  -1,631
  -1,695
  -1,761
  -1,830
  -1,903
  -1,979
  -2,059
  -2,143
  -2,231
  -2,325
  -2,423
  -2,527
  -2,637
  -2,752
  -2,874
  -3,003
  -3,139
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
 
  2,919
  1,770
  1,955
  2,147
  2,346
  2,553
  2,768
  2,990
  3,221
  3,459
  3,706
  3,962
  4,228
  4,504
  4,790
  5,088
  5,398
  5,720
  6,056
  6,406
  6,770
  7,151
  7,548
  7,963
  8,396
  8,849
  9,323
  9,819
  10,337
  10,880
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
 
  2,736
  1,545
  1,578
  1,592
  1,586
  1,561
  1,516
  1,454
  1,377
  1,287
  1,186
  1,078
  965
  852
  739
  632
  530
  437
  354
  281
  218
  166
  123
  89
  63
  43
  29
  19
  12
  7
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 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 16
Price to Sales 1.3
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 28.7
Price to Free Cash Flow 33.7
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 $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 15.1% 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 5.1 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 -12.1%. 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 230.435 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 $14.3 billion.

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LGIH LGI Homes 71.64 378.59  str.buy
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COMPANY NEWS

▶ Dow Down, But Alphabet, Apple Show Fortitude; Can Snap Turn Higher?   [Dec-05-17 04:45PM  Investor's Business Daily]
▶ 17 Biggest Construction Companies in America in 2017   [Nov-23-17 09:06AM  Insider Monkey]
▶ Households Think Its a Good Time to Buy a Home   [Nov-22-17 04:20PM  Market Realist]
▶ Lennar division leader lays out strategy to sell homes in South Florida   [Nov-21-17 06:40AM  American City Business Journals]
▶ Lennar Announces Offering of Senior Notes   [09:03AM  PR Newswire]
▶ Stocks With Rising Relative Price Strength: Lennar   [03:00AM  Investor's Business Daily]
▶ Lennar Earns Relative Strength Rating Upgrade   [03:00AM  Investor's Business Daily]
▶ Home builder stocks slump on tax plan   [Nov-03-17 03:44PM  CNBC Videos]
▶ GOPs tax plan may shake up the housing market   [10:31AM  Yahoo Finance Video]
▶ Tesla, Lennar fall but L Brands rises   [Nov-02-17 04:27PM  Associated Press]
▶ What Happened in the Stock Market Today   [05:09PM  Motley Fool]
▶ Lennar, Strayer, Dynegy Announce Deals; These May Be Next   [04:06PM  Investor's Business Daily]
▶ Why Lennar wants to merge with one of its largest competitors   [03:35PM  American City Business Journals]
▶ Two of the Triangle's largest homebuilders merging   [01:22PM  American City Business Journals]
▶ Watch: Jim Cramer Says Lennar Is a Buy   [11:11AM  TheStreet.com]
▶ Lennar inks merger agreement with CalAtlantic Group   [09:38AM  American City Business Journals]
▶ Lennar Is Still Not a Favorite of Mine   [Oct-27-17 12:30PM  TheStreet.com]
▶ GL Homes edges Lennar in push to buy golf course from Boca Raton   [Oct-25-17 01:50PM  American City Business Journals]
▶ Should Value Investors Pick Lennar (LEN) Stock?   [Oct-18-17 09:55AM  Zacks]
▶ Lennar introduces homes with Amazon Alexa (Video)   [Oct-17-17 02:55PM  American City Business Journals]
▶ Analyzing the future of the housing market   [11:35AM  Yahoo Finance Video]
▶ Q3 Earnings Season Kicks Off: 4 Housing Picks   [Oct-13-17 04:58PM  Zacks]
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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