Press release from PR Newswire
S&P Equity Research Picks Lennar Corp. 'A' Shares Focus Stock of the Week
Monday, July 26, 2010
NEW YORK, July 26 /PRNewswire/ -- Lennar Corp. Class A shares (LEN: $15) have been picked by Standard & Poor's Equity Research as its Focus Stock of the Week. LEN carries S&P's highest investment recommendation of 5-STARS, or Strong Buy.
"We expect this U.S. homebuilder to benefit from its diversified geography for selling new homes and other real estate-related investments, despite high unemployment rates, increased foreclosures, and tightening credit standards," said Kenneth Leon, Homebuilders Equity Analyst at Standard & Poor's Equity Research. "In our opinion, the U.S. housing market is beginning to stabilize and homebuyers can take advantage of increased affordability resulting from declining home prices, a large supply of inventory, and historically low interest rates for home mortgages."
Leon observes that in the last two quarters Lennar has realized positive growth in net new orders and contract backlog, with the latter increasing to $655 million at May 31, 2010 from $455 million at the end of its fiscal year in November 2009. He says this is the company's highest level for backlog since August 2008. Leon notes that backlog in some ways is a good indicator of a company's likely sales and earnings for the next several quarters, as it is derived by subtracting current-period closings from the sum of all existing orders that have not yet been closed.
"We believe Lennar can achieve profitability with reduced sales incentives and lower construction costs on new scaled-down homes coming to the market," said Mr. Leon. "We expect the company to be opportunistic in new land purchases or option land contracts, with abundant land coming to market from banks that took possession of distressed or bankrupt private homebuilders."
To view a video of Mr. Leon discussing LEN, paste the following link in to your browser.
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S&P Global STARS Distribution
In North America
As of June 30, 2010, research analysts at Standard & Poor's Equity Research Services North America recommended 38.2% of issuers with buy recommendations, 52.2% with hold recommendations and 9.6% with sell recommendations.
As of June 30, 2010, research analysts at Standard & Poor's Equity Research Services Europe recommended 35.7% of issuers with buy recommendations, 40.7% with hold recommendations and 23.6% with sell recommendations.
As of June 30, 2010 research analysts at Standard & Poor's Equity Research Services Asia recommended 45.3% of issuers with buy recommendations, 48.3% with hold recommendations and 6.4% with sell recommendations.
As of June 30, 2010, research analysts at Standard & Poor's Equity Research Services globally recommended 38.4% of issuers with buy recommendations, 49.8% with hold recommendations and 11.8% with sell recommendations.
5-STARS (Strong Buy): Total return is expected to outperform the total return of a relevant benchmark, by a wide margin over the coming 12 months, with shares rising in price on an absolute basis.
4-STARS (Buy): Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months, with shares rising in price on an absolute basis.
3-STARS (Hold): Total return is expected to closely approximate the total return of a relevant benchmark over the coming 12 months, with shares generally rising in price on an absolute basis.
2-STARS (Sell): Total return is expected to underperform the total return of a relevant benchmark over the coming 12 months, and the share price is not anticipated to show a gain.
1-STARS (Strong Sell): Total return is expected to underperform the total return of a relevant benchmark by a wide margin over the coming 12 months, with shares falling in price on an absolute basis.
Relevant benchmarks: In North America, the relevant benchmark is the S&P 500 Index, in Europe and in Asia, the relevant benchmarks are generally the S&P Europe 350 Index and the S&P Asia 50 Index.
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