Let's talk about the popular Lennar Corporation (NYSE:LEN). The company's shares saw a significant share price rise of over 20% in the past couple of months on the NYSE. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Lennar’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Lennar

What Is Lennar Worth?

According to my valuation model, Lennar seems to be fairly priced at around 0.3% below my intrinsic value, which means if you buy Lennar today, you’d be paying a fair price for it. And if you believe that the stock is really worth $131.95, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Lennar’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Lennar?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -0.3% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Lennar. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Currently, LEN appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on LEN for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on LEN should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing Lennar at this point in time. In terms of investment risks, we've identified 1 warning sign with Lennar, and understanding this should be part of your investment process.

If you are no longer interested in Lennar, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.