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Lennar Corporation reported worser than expected Q1 earnings after the market profit up from last year but a decline in homebuilding revenue hurt the top line. $LEN is benefitting from the new income tax regime.

 Lennar

Lennar Corporation NYSE: LEN Reported Earnings Before open Tuesday

 $0.74 Missed $0.75 EPS AND $3.9 Billion Missed $4.11 Billion forecast in revenue. 

Earnings 

Lennar Corporation for the quarter ending in February, the company's fiscal first quarter, was 74 cents a share, up 39.6% from the same period last year but 1 cent lower than consensus forecast. Group revenues  rose 31% to $3.9 billion but also missed analysts' forecasts of $4.11 billion.

Lennar Corporation’s results came after KB Homes reported yesterday and weak housing data released earlier Tuesday with the House prices ring a seasonally adjusted 0.1% in January the S&P CoreLogic Case-Shiller 20-city index showed. Price gains were 3.6% higher compared to a year ago. However that is the slowest annual growth since 2012 with a monthly decline for the third-straight month.

US February housing starts were also released at1162K vs 1210K expected from the prior 1230K (revised to 1273K). The fall was large at -8.7% vs -1.6% expected. US February building permits were also weaker at 1296K vs 1305K exp from the prior 1345K (revised to 1317K). The fall was -1.6% vs -0.9% expected.

Lennar Corporation NYSE: LEN

Market Reaction Pre-market 51.48 +1.77 (+3.56%)

Highlights and Outlook

"We continued to see choppiness in the marketplace during our first quarter, consistent with what we highlighted on our fourth quarter conference call," said CEO Stuart Miller. "However, during the quarter, mortgage interest rates subsided and ultimately pulled back and home prices moderated providing a catalyst for the new home market to correct itself.  Accordingly, sequentially throughout the first quarter, we saw increased interest in new home purchases as part of an improving and stabilizing housing market, We continue to believe that the basic underlying housing market fundamentals of low unemployment, higher wages and low inventory levels remain favorable."

  • New home orders rose 24% to to $4.2 billion,
  • Deliveries over the three month period jumped 30% from last year to 8,820 units.
  • The group's backlog, however, slipped 2% to 17.259 units.
  • New orders soared 24% to 10,463 homes.
  • Homebuilding gross margin was 20.1%, 
  • SG&A of 9.5% marked an all-time, first-quarter low.
  • Repurchased an additional one million shares of our stock for $47.0 million during the quarter 

Source: Lennar, Alpha Street

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