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Lennar ROIC %

: 18.50% (As of May. 2022)
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ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Lennar's annualized return on invested capital (ROIC %) for the quarter that ended in May. 2022 was 18.50%.

As of today (2022-08-14), Lennar's WACC % is 9.33%. Lennar's ROIC % is 15.87% (calculated using TTM income statement data). Lennar generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Lennar ROIC % Historical Data

The historical data trend for Lennar's ROIC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Lennar Annual Data
Trend Nov12 Nov13 Nov14 Nov15 Nov16 Nov17 Nov18 Nov19 Nov20 Nov21
ROIC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6.06 7.35 7.13 9.40 14.34

Lennar Quarterly Data
Aug17 Nov17 Feb18 May18 Aug18 Nov18 Feb19 May19 Aug19 Nov19 Feb20 May20 Aug20 Nov20 Feb21 May21 Aug21 Nov21 Feb22 May22
ROIC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 13.04 14.91 18.60 11.22 18.50

Competitive Comparison

For the Residential Construction subindustry, Lennar's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Lennar ROIC % Distribution

For the Homebuilding & Construction industry and Consumer Cyclical sector, Lennar's ROIC % distribution charts can be found below:

* The bar in red indicates where Lennar's ROIC % falls into.



Lennar ROIC % Calculation

Lennar's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Nov. 2021 is calculated as:

ROIC % (A: Nov. 2021 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Nov. 2020 ) + Invested Capital (A: Nov. 2021 ))/ count )
=5138.258 * ( 1 - 23.41% )/( (25981.304 + 28923.133)/ 2 )
=3935.3918022/27452.2185
=14.34 %

where

Invested Capital(A: Nov. 2020 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=29935.177 - 1037.338 - ( 2916.535 - max(0, 1037.338 - 22662.185+2916.535))
=25981.304

Invested Capital(A: Nov. 2021 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=33207.778 - 1321.247 - ( 2963.398 - max(0, 1321.247 - 25144.515+2963.398))
=28923.133

Lennar's annualized Return on Invested Capital (ROIC %) for the quarter that ended in May. 2022 is calculated as:

ROIC % (Q: May. 2022 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Feb. 2022 ) + Invested Capital (Q: May. 2022 ))/ count )
=7474.868 * ( 1 - 24.63% )/( (29707.519 + 31199.353)/ 2 )
=5633.8080116/30453.436
=18.50 %

where

Invested Capital(Q: Feb. 2022 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=32635.252 - 1321.148 - ( 1606.585 - max(0, 1321.148 - 24777.699+1606.585))
=29707.519

Invested Capital(Q: May. 2022 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=34306.202 - 1555.283 - ( 1551.566 - max(0, 1555.283 - 26490.509+1551.566))
=31199.353

Note: The Operating Income data used here is four times the quarterly (May. 2022) data.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Lennar  (NYSE:LEN) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROIC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Lennar's WACC % is 9.33%. Lennar's ROIC % is 15.87% (calculated using TTM income statement data). Lennar generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases. Lennar earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.


Lennar ROIC % Related Terms

Thank you for viewing the detailed overview of Lennar's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.


Lennar Business Description

Lennar logo
Address
700 Northwest 107th Avenue, Miami, FL, USA, 33172
After merging with CalAtlantic in February 2018, Lennar has become the largest public homebuilder (by revenue) in the United States. The company's homebuilding operations target first-time, move-up, and active adult homebuyers mainly under the Lennar brand name. Lennar's financial-services segment provides mortgage financing and related services to its homebuyers. Miami-based Lennar is also involved in multifamily construction and has invested in numerous housing-related technology startups.
Executives
Banse Amy director 345 PARK AVENUE SAN JOSE CA 95110
Mccall Jeffrey Joseph officer: Senior Vice President 26 TECHNOLOGY DRIVE IRVINE CA 92618
Stowell Scott D director
Olivera Armando J director C/O FLUOR CORPORATION 6700 LAS COLINAS BLVD IRVING TX 75039
Mcclure Teri P director 55 GLENLAKE PARKWAY NE ATLANTA GA 30328
Gilliam Theron I director GMS INC. 100 CRESCENT CENTRE PARKWAY, SUITE 800 TUCKER GA 30084
Collins David M officer: Controller LENNAR CORPORATION 700 NW 107 AVENUE STE 400 MIAMI FL 33172
Hudson Sherrill W director 201 SOUTH BISCAYNE BOULEVARD 34TH FLOOR, MIAMI CENTER MIAMI FL 33131
Somma Lawrence C officer: Treasurer C/O LYONDELLBASELL INDUSTRIES N.V. DELFTSEPLEIN 27E ROTTERDAM P7 3013AA
Beckwitt Richard officer: Executive Vice President LENNAR CORPORATION 700 NW 107 AVE 4TH FLR MIAMI FL 33172
Mp Alpha Holdings Lllp Investments Trust 10 percent owner 700 N.W. 107TH AVENUE MIAMI FL 33172
Mp Alpha Holdings Lllp 10 percent owner 700 NORTHWEST 107TH AVENUE MIAMI FL 33172
Sonnenfeld Jeffrey director 14 WALL ST 13TH FL NEW YORK NY 10005
Sustana Mark officer: General Counsel and Secretary LENNAR CORPORATION 700 NW 107 AVE 4TH FLR MIAMI FL 33172
Bolotin Irving director LENNAR CORPORATION 700 NW 107 AVE 4TH FLR MIAMI FL 33172

Lennar Headlines

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