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LEN

Homebuilder Lennar to post Q2 numbers June 21

What's Happening

Homebuilder Lennar Corp. ( LEN ) is on deck to report its second-quarter results before the market open on June 21. Analysts call for earnings of $0.87 per share, up from $0.79 during the same period last year. The stock is down 5.5% on the year.

Technical Analysis

LEN was recently trading at $46.24, down $9.80 from its 12-month high and $9.10 above its 12-month low. Technical indicators for LEN are neutral and the stock is in a tight sideways trend. The stock has recent support above $44.70 and recent resistance below $47.90. Of the 10 analysts who cover the stock, four rate it a "strong buy", one rates it a "buy", and five rate it a "hold". The stock receives S&P Capital IQ's 4 STARS "Buy" ranking.

Analyst's Thoughts

After a big rally in February and early-March, LEN has been stuck in a sideways trend over the last couple of months, and a strong earnings report would help the stock regain its upward momentum. The housing recovery remains intact, but there is still a bit of concern over future interest rate hikes. Last year there was a lot of anticipation over a series of interest-rate increases this year, but that no longer seems to be the case, and as such the housing recovery should remain intact. Lennar is just one of many homebuilders left to report earnings, so the stock will react to more than just its results, as the overall sector will find direction from those reports left to come. The stock has a very low valuation, with a P/E of 12.8, so there is significant upside potential should the company post stronger than expected results, but the valuation should also limit any negative response to an earnings miss as long as results are not greatly weaker than expected.

Stock Only Trade

Bullish Trade

If you want a bullish hedged trade on the stock, consider an August 35/40 bull-put credit spread for a 25-cent credit. That's a potential 5.3% return (30.5% annualized*) and the stock would have to fall 13.0% to cause a problem.

Bearish Trade

If you are looking for a bearish hedged option trade on LEN, consider an August 50/55 bear-call credit spread for a 50-cent credit. That's a potential 11.1% return (64.4% annualized*) and the stock would have to climb 9.2% to cause a problem.

Covered Call Trade

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Originally published on InvestorsObserver.com


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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