Please ensure Javascript is enabled for purposes of website accessibility

Why Lennar Stock Gained 21% in January

By Demitri Kalogeropoulos – Updated Apr 21, 2019 at 12:25AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors cheered the homebuilder's latest earnings report.

What happened

Lennar (LEN -1.31%) shareholders trounced the market last month as their stock gained 21% compared to an 8% spike in the S&P 500, according to data provided by S&P Global Market Intelligence.

Their wider performance has been negative, though, with shares underperforming the market over the past one-year, three-year, and five-year periods.

Inside a luxury kitchen.

Image source: Getty Images.

So what

The foundations for January's rally were set in December, when indexes dove on concerns of an economic slowdown. Fears about an impending downturn in the housing market caused Lennar's stock to fall 8%, in fact.

Thus, shares were primed for a rebound if the company could modestly outperform low expectations for its fiscal fourth quarter, which it did. When it reported earnings in early January, Lennar said home deliveries shot higher by 64% as higher average prices contributed to a 71% boost in revenue to $6.5 billion.

Now what

There were still plenty of signs of softening trends in the homebuilding market in Lennar's report. Sales promotions rose and growth slowed from the prior quarter, for example. Executive Chairman Stuart Miller predicted that these issues would be short-term in nature since the economic growth fundamentals, including unemployment levels and wage growth, remain strong. Investors will see over the next few quarters whether that bright outlook pans out and Lennar's sales growth rate rebounds.

Check out the latest earnings call transcripts for companies we cover.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Lennar Stock Quote
$79.85 (-1.31%) $-1.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.