Lennar Shares Jump as Q3 Profit and Revenue Blow Away Expectations

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September 20, 2016 7:23am NYSE:ITB NYSE:LEN

Homebuilder Lennar Corporation (NYSE:LEN) posted strong third quarter results this morning, with both profit and sales blowing away expectations.


The Miami-based company reported Q3 net income of $1.01 per share, easily beating Wall Street estimates of $0.89. Revenue rose 13.7% from last year to $2.83 billion, also topping analyst expectations of $2.69 billion.

Other highlights from the report included:

  • New home deliveries increased to 6,758 homes in the third quarter of 2016 from 6,314 homes last year.
  • New orders of 7,018 homes were up 8%, with new orders dollar value of $2.6 billion up 10%.
  • Backlog of 9,253 homes was up 12%, with backlog dollar value of $3.4 billion up 14%.
  • Operating margin on home sales was 13.2%.

From the press release:

“Our third quarter new orders and home deliveries increased 8% and 7% year-over-year, respectively, to 7,018 homes and 6,779 homes, respectively. Our core homebuilding business continued to produce solid operating results in the third quarter of 2016 as our operating margin was 13.2%, notwithstanding a lower gross margin in the quarter, as expected. We continue to see benefits stemming from our focus on S,G&A generally, and digital marketing in particular, which helped to reduce S,G&A as a percentage of home sales revenues to 9.3%.

“We have continued to focus our land spend on high quality, ‘A’ locations while also ramping up our first-time homebuyer land positions as that segment of the market continues to improve. Meanwhile, our balance sheet continues to strengthen, positioning us well to seize unique, strategic opportunities as they present themselves.”

LEN-2016-09-20

Lennar shares rose $1.24 (+2.75%) to $46.33 in premarket trading Tuesday. Prior to today’s report, LEN had fallen 7.81% year-to-date, versus a 4.67% rise in the benchmark S&P 500 during the same period.

ETF investors should keep a close eye on the iShares Dow Jones US Home Construction ETF (NYSE:ITB) today. Lennar is strongly weighted in this fund, representing 10.66% of its total holdings, so the ETF should see a pop on the positive news.


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