Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Lennar Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -3.4% to 5.9% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 17, DPO 24, DIO 273). At a 7.2% WACC with mid-year discounting, the terminal value (86% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 9.3x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $193.86 per share, suggesting LEN is undervalued by 113.3% at the current price of $90.88.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 5,138 | 5,311 | 5,791 | 6,135 | 6,499 | 6,662 |
| (−) Net Interest | 18 | 18 | 20 | 21 | 23 | 23 |
| (+) D&A | 116 | 126 | 139 | 145 | 138 | 141 |
| EBITDA | 5,272 | 5,456 | 5,950 | 6,301 | 6,659 | 6,826 |
| (−) Tax | 1,218 | 1,259 | 1,373 | 1,454 | 1,541 | — |
| (−) CapEx | 115 | 119 | 129 | 137 | 145 | — |
| (−) ΔWC | 7,217 | 633 | 1,748 | 1,253 | 1,327 | — |
| Free Cash Flow (FCF) | -3,277 | 3,446 | 2,700 | 3,457 | 3,646 | — |
| Peers' EBITDA Multiple | 9.3x | |||||
| Terminal Value | 63,617 | |||||
| WACC / Discount Rate | 7.22% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -3,165 | 3,104 | 2,268 | 2,708 | 2,664 | 44,886 |
| Enterprise Value | 52,464 | |||||
| Projection Period | 7,578 | 14.4% | ||||
| Terminal Value | 44,886 | 85.6% | ||||
| (−) Current Net Debt | 2,512 | |||||
| Equity Value | 49,953 | |||||
| (÷) Outstanding Shares | 258M | |||||
| Fair Price | $194 | +113.3% | ||||
| WACC \ EV/EBITDA Exit Multiple | 5.3x | 7.3x | 9.3x | 11.3x | 13.3x |
|---|---|---|---|---|---|
| 5.2% | $131 | $172 | $213 | $254 | $295 |
| 6.2% | $125 | $164 | $203 | $242 | $282 |
| 7.2% | $119 | $156 | $194 | $231 | $269 |
| 8.2% | $114 | $149 | $185 | $221 | $256 |
| 9.2% | $108 | $142 | $176 | $210 | $245 |
Current price: $90.88. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.