Lennar Corp. (NYSE: LEN) reported Wednesday that cheaper mortgage rates led to a higher demand for its homes that drove stronger-than-expected results in the third quarter.
The Miami-based homebuilder beat expectations on both the top and bottom lines, sending its shares up 3% in premarket trade.
Deliveries rose 7% to 13,522 homes in the quarter, while average sales price of homes delivered was $394,000 versus $415,000 in the earlier-year period. In the third quarter of 2019, new orders increased 9% to 13,369 homes.
The company had been expecting new orders to rise between 5.5% to 7.6%. Analysts often see orders as an indicator of a homebuilder’s future performance.
Orders in California have faded this year than Lennar’s total orders, as rich Chinese buyers continue to adopt a more cautious approach due to the ongoing trade war between the United States and China.
Lennar stock has gained nearly 45% so far this year and about 19% in the past 12 months.
LEN Earnings & Outlook
Lennar had a profit of $513.4 million, or $1.59 per share in the quarter, up 13% from $453.2 million, or $1.37 per share in the same period last year. Analysts were expecting earnings of earnings of $1.32 per share, according to data compiled by FactSet.
Revenue came in at $1.64 billion, up 3% from a year earlier. On average, analysts surveyed by FactSet had forecasting revenue of $5.44 billion.
Lennar CEO Comments
“We’ve clearly focused our attention on becoming a land lighter company. Regarding our forward-looking 40% goal of controlled homesites (versus owned), during the quarter, we made great progress by increasing our controlled homesites from 25% to 30%. We expect to continue making significant progress on this goal by entering into deals with regional and national land platforms,” said Lennar Chief Executive Rick Beckwitt.
“During the quarter, we also made progress on reducing our years owned supply of homesites from 4.5 to 4.4 years and continue to target a goal of 3.0 years. As we reach these goals, it will enable us to generate significant cash flow by reducing our land spend, driving meaningfully greater returns over time,” Beckwitt added.
Lennar Corp Profile
After merging with CalAtlantic in February 2018, Lennar has become the largest 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. – Warrior Trading News
