Lennar Stock Drop Looks Sharp, But How Deep Can It Go?
Lennar (LEN) stock is down 20.0% in 21 trading days. The recent slide reflects concerns around Lennar’s Q4 profit miss and squeezed margins from sales incentives amid a tough housing market, but sharp drops often raise a tougher question: is the weakness temporary, or a sign of deeper cracks in the story?
Before judging its downturn reslience, let’s look at where Lennar stands today.
- Size: Lennar is a $27 Bil company with $35 Bil in revenue currently trading at $104.90.
- Fundamentals: Last 12 month revenue growth of -4.7% and operating margin of 10.0%.
- Liquidity: Has Debt to Equity ratio of 0.2 and Cash to Assets ratio of 0.05
- Valuation: Lennar stock is currently trading at P/E multiple of 10.0 and P/EBIT multiple of 7.7
- Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned -2.1% within a year. See LEN Dip Buy Analysis.
These metrics point to a Weak operational performance, alongside Very Low valuation – making the stock Fairly Priced. For details, see Buy or Sell LEN Stock
That brings us to the key consideration for investors worried about this fall: how resilient is LEN stock if markets turn south? This is where our downturn resilience framework comes in. Suppose LEN stock falls another 20-30% to $73 – can investors comfortably hold on? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns, based on (a) how much the stock fell and, (b) how quickly it recovered. Below, we dive deeper into each such downturn.
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2022 Inflation Shock
- LEN stock fell 44.8% from a high of $116.91 on 10 December 2021 to $64.49 on 16 June 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 15 June 2023
- Since then, the stock increased to a high of $192.45 on 19 September 2024 , and currently trades at $104.90
| LEN | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -44.8% | -25.4% |
| Time to Full Recovery | 364 days | 464 days |
2020 Covid Pandemic
- LEN stock fell 58.8% from a high of $71.22 on 11 February 2020 to $29.35 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 27 July 2020
| LEN | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -58.8% | -33.9% |
| Time to Full Recovery | 126 days | 148 days |
2018 Correction
- LEN stock fell 47.0% from a high of $71.82 on 19 January 2018 to $38.06 on 24 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 27 July 2020
| LEN | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -47.0% | -19.8% |
| Time to Full Recovery | 581 days | 120 days |
2008 Global Financial Crisis
- LEN stock fell 93.5% from a high of $56.11 on 2 February 2007 to $3.64 on 21 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 4 October 2017
| LEN | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -93.5% | -56.8% |
| Time to Full Recovery | 3,239 days | 1,480 days |
Feeling jittery about LEN stock? Consider portfolio approach.
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