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Lennar Corporation (LEN) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Lennar Corporation (LEN)

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Intrinsic Value (DCF)

Current$122.25
→
Intrinsic$242.55
+98%
$165.89$242.55$388.09
Market implies 3% growth for 5 years
DCF analysis suggests LEN could have 98% upside at 20% growth — verify assumptions match your view.
At $122, the market prices in only 3% growth — below historical 20%, suggesting low expectations.
Range: Bear $166 → Bull $388. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →16%18%20%22%
8%$295$320$346$374
10%$208$225$243$262
12%$160$172$186$200
14%$129$139$149$161

Bull Case

  • Bull case ($388) offers 217% upside at 24% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (3%) ≤ historical CAGR (20%)

Bear Case

  • Bear case ($166) with 16% growth, 12% discount rate
  • Using 20% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$2.68B
Year 2$3.22B
Year 3$3.86B
Year 4$4.64B
Year 5$5.56B
Terminal$81.87B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$2.23BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is LEN stock undervalued or overvalued?
🟢 UNDERVALUED

LEN trades at $122.25 vs. our DCF-derived intrinsic value of $242.13, implying +128% upside. At a 10.0% WACC and 20.0% projected FCF growth, the market appears to be underpricing the present value of LEN's future cash flows. The bear case ($159.48) still suggests upside, providing margin of safety.

What is LEN's intrinsic value?

Using a 5-year DCF model: Base FCF of $2.23B, projected at 20.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-527M net debt and dividing by 0.27B shares: Bear $159.48 | Base $242.13 | Bull $363.85. Current price $122.25 implies +128% to base case.

How is LEN's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($65.34B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.