Option Trade 
Lennar Corporation (NYSE:LEN) Calls 
Wednesday, March 16, 2016

**OPTION TRADE: Buy the LEN Aug 2016 45.000 call (LEN160819C00045000) at approximately $4.20. Place a pre-determined sell at $8.50.

Note: No protective stop losses added -- but if you wish to do so make it $1.70.

by Ian Harvey

March 16, 2016

Lennar Corporation (NYSE: LEN), a homebuilder, will post its first-quarter numbers on March 17th. The company will release its quarterly results before the market opens, with analysts forecasting earnings of $0.53 per share.

The entire housing market showed weakness in the latter part of 2015, as fears of a series of potential interest-rate increases this year weighed on the sector. After the volatile market during the first two months of the year, expectations have fallen for multiple rate hikes, and as a result enthusiasm has returned to the overall sector.

Now, the housing market remains on solid ground, and while the sector has rebounded, it has underperformed the overall market, leaving a lot of additional upside potential.

This has allowed Lennar to trend higher with the overall market, and with a P/E of 12.9 there appears to be a lot of additional upside potential. Toll Brothers (TOL) reported slightly weaker than expected quarterly results toward the end of February, but the stock was able to trend higher with the overall market despite a small earnings miss. A big reason was stronger-than-expected revenue.

The stock is down 8.4% on the year.

Shares of Lennar will open at $45.47 today. Lennar has a 12 month low of $37.14 and a 12 month high of $56.04. The company has a market cap of $9.61 billion and a PE ratio of 13.14. The firm’s 50 day moving average price is $42.02 and its 200 day moving average price is $47.29.

Lennar last released its quarterly earnings results on Friday, December 18th. The company reported $1.21 EPS for the quarter, topping analysts’ consensus estimates of $1.12 by $0.09. The firm had revenue of $2.95 billion for the quarter.

During the same period in the previous year, the company posted $1.07 earnings per share. The company’s revenue for the quarter was up 14.0% compared to the same quarter last year. On average, equities research analysts forecast that Lennar will post $3.80 earnings per share for the current fiscal year.

Sanders Capital LLC raised its position in Lennar by 36.2% in the fourth quarter. Sanders Capital LLC now owns 6,154,158 shares of the company’s stock valued at $309,995,000 after buying an additional 1,635,397 shares during the period.

A number of other large investors also recently made changes to their positions in KR, such as:-

• Greenhaven Associates Inc. bought a new position in shares of Lennar during the fourth quarter worth about $199,878,000.
• Capital World Investors raised its position in shares of Lennar by 576.0% in the fourth quarter. Capital World Investors now owns 2,934,000 shares of the company’s stock worth $143,502,000 after buying an additional 2,500,000 shares during the last quarter.
• Barrow Hanley Mewhinney & Strauss LLC raised its position in shares of Lennar by 1.1% in the fourth quarter. Barrow Hanley Mewhinney & Strauss LLC now owns 2,610,103 shares of the company’s stock worth $127,660,000 after buying an additional 29,209 shares during the last quarter.
• Finally, LMM LLC raised its position in shares of Lennar by 7.6% in the fourth quarter. LMM LLC now owns 2,065,125 shares of the company’s stock worth $101,006,000 after buying an additional 146,400 shares during the last quarter.

Lennar Co. was upgraded by stock analysts at Vetr from a “buy” rating to a “strong-buy” rating in a report released on Tuesday. The firm presently has a $51.00 target price on the stock. Vetr‘s price objective suggests a potential upside of 12.16% from the stock’s previous close.

Also, several other equities research analysts have recently commented on the company.

• MKM Partners lifted their price target on shares of Lennar from $49.00 to $51.00 and gave the stock a “neutral” rating.

• JPMorgan Chase & Co. began coverage on shares of Lennar and set a “neutral” rating and a $54.00 price target for the company.

• Deutsche Bank reissued a “hold” rating and issued a $48.00 price objective on shares of Lennar.

• Finally, Susquehanna raised shares of Lennar from a “neutral” rating to a “positive” rating and boosted their price objective for the company from $40.98 to $53.00 in a research report on Wednesday, January 20th.

Nine research analysts have rated the stock with a hold rating, seven have assigned a buy rating and one has given a strong buy rating to the company. The stock presently has a consensus rating of “Buy” and a consensus price target of $53.67.

Harvey’s Options Volatility Indicator

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

**OPTION TRADE: Buy the LEN Aug 2016 45.000 call (LEN160819C00045000) at approximately $4.20. Place a pre-determined sell at $8.50.

Note: No protective stop losses added -- but if you wish to do so make it $1.70.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



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