Lennar Corporation Explodes To The Upside Wednesday; Is There Still More To Come For The Bulls?

Lennar Corporation stock rocketed higher Wednesday after the company announced that it beat earnings and revenue estimates for the last quarter. Is there even more upside ahead for this stock?

Lennar Corporation LEN shareholders have had to be patient with the stock for the last six or seven months after the stock put in a short-term peak at $44 at the end of February.

Since that peak, the stock drifted as low as around $35.75 before beginning its most recent ascent. After Wednesday's gap higher and close near the highs for the day, the stock is trading at $41.72. Do the company's fundamental picture and technical chart pattern tell of even higher prices still to come? Of course, those bullish of the stock would say, “YES!”

Bullish evidence for Lennar…

The bulls in Lennar Corp.'s stock point immediately to the company's ability to wow analysts and shareholders with their quarterly reports.

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The tendency to outperform the consensus estimates for earnings and revenue speaks to either the quality job being done by management or the better-than-expected underlying market conditions into which Lennar is selling their product. Or, perhaps it is a combination of both factors.

Here are some additional bullish bullet points on Lennar:

• The company's valuations are very reasonable
• Enterprise value of $12.85 billion trumps the market capitalization of $8.46 billion
• The price-to-book is only 1.82
• The price-to-sales is only 1.19
• The price-to-earnings is only just over 13 versus estimated revenue growth of 15.5 percent and EPS growth of 25.7 percent for 2015
• The net profit margins for Lennar are approximately 7.47 percent
• The current ratio for the company comes in at a very healthy 7.42

The bearish crowd out there still holds on to the following bearish tidbits in the Lennar story:

• The company carries over $5.73 billion in debt versus only $874 million in cash on hand
• The debt-to-equity ratio for Lennar comes in at 117.10 percent

Technicians on Lennar…

The technical analyst crowd notes that LEN stock likely completed an “abc” downside correction in early August and that it should, in theory, run the rest of the way up to the projected target for wave “5” at $48.31. From $41.72, that represents over 15 percent of upside remaining in this move. Nothing goes straight up, though, and the key for prospective bulls is to buy on the dips when they occur.

Overall…

Lennar has go the big “MO” going for it in the short-term. The move here seems to be to go long the stock on pullbacks if at all possible. Try to maximize the reward-to-risk ratio on the long-side trade by entering on pullbacks as close to identifiable support as possible.