After looking at Lennar Corporation’s (NYSE:LEN) latest earnings announcement (31 August 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Lennar’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for Lennar

How Did LEN’s Recent Performance Stack Up Against Its Past?

To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This enables me to examine different companies in a uniform manner using the latest information. For Lennar, the latest twelve-month earnings is $806.3M, which, in comparison to the previous year’s figure, has declined by -7.42%. Given that these values are relatively short-term, I have computed an annualized five-year figure for LEN’s net income, which stands at $563.6M. This shows that while earnings declined against the prior year, over a longer period of time, Lennar’s profits have been rising on average.

What’s the driver of this growth? Let’s take a look at whether it is solely attributable to an industry uplift, or if Lennar has experienced some company-specific growth. The hike in earnings seems to be driven by a substantial top-line increase beating its growth rate of expenses. Though this has led to a margin contraction, it has made Lennar more profitable. Viewing growth from a sector-level, the US consumer durables industry has been growing its average earnings by double-digit 11.28% over the previous year, and 15.43% over the past five. This shows that whatever uplift the industry is profiting from, Lennar has not been able to leverage it as much as its average peer.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies are profitable, but have volatile earnings, can have many factors impacting its business. You should continue to research Lennar to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for LEN’s future growth? Take a look at our free research report of analyst consensus for LEN’s outlook.