Lennar Builds Momentum Before Q2 Earnings

LEN has a history of positive swings after reporting earnings

Deputy Editor
Jun 12, 2020 at 12:19 PM
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The shares of Lennar Corporation (NYSE:LEN) are up 3.4%, to trade at $59.12 this afternoon, just ahead of the home construction and real estate company's fiscal second-quarter earnings report, which is due out before Tuesday's open. Below, we'll dig into how LEN has fared in the past, and see what post-earnings moves the options market is pricing in for the shares. 

Today's rise puts Lennar stock up 134.3% from its mid-March, eight-year low of $25.42. Now up 12.2% year-over-year, LEN has a steady level of support from its 180-day moving average -- a trendline that loomed overhead for much of the last three months. Meanwhile, LEN's 30-day moving average has also been acting as a guide for the equity.

LEN Chart June 12

Despite calls outnumbering puts on an absolute basis, the stock's 50-day put/call volume ratio of 0.75 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is in the elevated 89th percentile of its annual range. In other words, this suggests a very healthy appetite for long puts of late.

Still, analysts are taking an optimistic approach with Lennar stock. Of the 15 brokerages in coverage, nine sport a "buy" or better rating. There are no "sells" in sight, and the security’s consensus 12-month price target of $58.94 is a razor-thin 0.3% discount to current levels. 

Investors may want to look toward Lennar's earnings with optimism. Specifically, LEN has closed higher the day after reporting in six of the past eight quarters. Over the past two years the stock has averaged a swing of 3.9%, regardless of direction, and his time around, the options pits are pricing in a much higher, 11.4% shift.

 

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