Should Value Investors Buy Lennar (LEN) Stock?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is Lennar (LEN). LEN is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 8.16. This compares to its industry's average Forward P/E of 8.24. LEN's Forward P/E has been as high as 14.03 and as low as 7.88, with a median of 10.91, all within the past year.

Investors will also notice that LEN has a PEG ratio of 0.42. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. LEN's PEG compares to its industry's average PEG of 0.54. Within the past year, LEN's PEG has been as high as 1.38 and as low as 0.41, with a median of 0.61.

We should also highlight that LEN has a P/B ratio of 1.30. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.34. Over the past 12 months, LEN's P/B has been as high as 2.16 and as low as 1.22, with a median of 1.55.

Value investors will likely look at more than just these metrics, but the above data helps show that Lennar is likely undervalued currently. And when considering the strength of its earnings outlook, LEN sticks out at as one of the market's strongest value stocks.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Lennar Corporation (LEN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.