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In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 26.7% and 10.5%, respectively. It is to be noted that this Miami-based homebuilder surpassed earnings expectations in the trailing 17 quarters.
On a year-over-year basis, fiscal second-quarter earnings and revenues increased by 37.3% and 3.8%, respectively.
The Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has remained stable at $3.47 in the past 60 days. The estimated figure indicates a decrease of 33% from $5.18 reported in the year-ago quarter.
The consensus mark for revenues is pegged at $8.53 billion, suggesting a 4.6% decline from the year-ago reported figure of $8.93 billion.
Let’s see how things have shaped up for this company.
Factors to Note
Lennar’s fiscal third-quarter home sales are expected to have decreased from the year-ago level, owing to the volatile mortgage rate environment since March 2022 and uncertain macroeconomic conditions. This has led to comparatively low demand.
We expect home sales to decrease by 7.8% year over year to $7.78 billion in the quarter. Homebuilding revenues are expected to be $7.81 billion, down 7.9% year over year.
On the fiscal second-quarter earnings call, LEN highlighted that it expects home deliveries of 17,750-18,250 units at an average price of nearly $449,000 (suggesting a decline from $491,000 a year ago). Meanwhile, our estimate for deliveries for the to-be-reported quarter is currently pegged at 17,860 homes, indicating a rise from 17,248 units a year ago.
Lennar expects new orders in the range of 18,000-19,000, pointing to growth from 14,366 reported in third-quarter fiscal 2022. Our estimate for new orders is currently pegged at 18,384 homes. Low-existing homes for sale have been driving future demand for new homes in the market. Also, digital marketing platforms, a land-lighter strategy and a dynamic pricing model bode well.
Our model predicts a backlog (units and values) of 17,860 homes or $7.82 billion compared with the year-ago quarter’s figures of 17,248 units or $8.46 billion.
That said, higher inflationary pressure and higher land, labor and raw material costs are expected to have put pressure on fiscal third-quarter margins. The company expects the homebuilding gross margin to be 23.5-24%, pointing to a decline from 29.2% a year ago.
Although Lennar has been focusing on continuous improvement of the homebuilding selling, general and administrative (SG&A) line, owing to operating leverage and investments in technology, lower sales are expected to put pressure on operating leverage. The company expects SG&A expenses, as a percentage of home sales, to be within 6.7-6.8%. In the last year, the metric was recorded at 5.8%.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Lennar this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of -3.09%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Currently, Lennar carries a Zacks Rank #2.
Stocks With the Favorable Combination
Here are some companies in the same space that, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported.
Dream Finders Homes is expected to register a 7.8% decline in earnings for the to-be-reported quarter. DFH reported better-than-expected earnings in two of the last four quarters and missed on the other two occasions, the average surprise being 122.7%.
Sterling Infrastructure, Inc. (STRL - Free Report) has an Earnings ESP of +0.67% and sports a Zacks Rank #1.
Sterling is expected to register a 27.8% increase in earnings for the to-be-reported quarter. The company reported better-than-expected earnings in two of the last four quarters and missed on the other two occasions, the average negative surprise being 0.6%.
Primoris Services Corporation (PRIM - Free Report) has an Earnings ESP of +2.83% and carries a Zacks Rank #2.
Primoris’ earnings for the to-be-reported quarter are expected to be down 20.5% from the year-ago level. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 104.4%.
Image: Bigstock
Can Lennar (LEN) Retain Its Beat Streak in Q3 Earnings?
Lennar Corporation (LEN - Free Report) is slated to report third-quarter fiscal 2023 results (ended Aug 31) after the closing bell on Sep 14.
In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 26.7% and 10.5%, respectively. It is to be noted that this Miami-based homebuilder surpassed earnings expectations in the trailing 17 quarters.
On a year-over-year basis, fiscal second-quarter earnings and revenues increased by 37.3% and 3.8%, respectively.
The Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has remained stable at $3.47 in the past 60 days. The estimated figure indicates a decrease of 33% from $5.18 reported in the year-ago quarter.
Lennar Corporation Price and EPS Surprise
Lennar Corporation price-eps-surprise | Lennar Corporation Quote
The consensus mark for revenues is pegged at $8.53 billion, suggesting a 4.6% decline from the year-ago reported figure of $8.93 billion.
Let’s see how things have shaped up for this company.
Factors to Note
Lennar’s fiscal third-quarter home sales are expected to have decreased from the year-ago level, owing to the volatile mortgage rate environment since March 2022 and uncertain macroeconomic conditions. This has led to comparatively low demand.
We expect home sales to decrease by 7.8% year over year to $7.78 billion in the quarter. Homebuilding revenues are expected to be $7.81 billion, down 7.9% year over year.
On the fiscal second-quarter earnings call, LEN highlighted that it expects home deliveries of 17,750-18,250 units at an average price of nearly $449,000 (suggesting a decline from $491,000 a year ago). Meanwhile, our estimate for deliveries for the to-be-reported quarter is currently pegged at 17,860 homes, indicating a rise from 17,248 units a year ago.
Lennar expects new orders in the range of 18,000-19,000, pointing to growth from 14,366 reported in third-quarter fiscal 2022. Our estimate for new orders is currently pegged at 18,384 homes. Low-existing homes for sale have been driving future demand for new homes in the market. Also, digital marketing platforms, a land-lighter strategy and a dynamic pricing model bode well.
Our model predicts a backlog (units and values) of 17,860 homes or $7.82 billion compared with the year-ago quarter’s figures of 17,248 units or $8.46 billion.
That said, higher inflationary pressure and higher land, labor and raw material costs are expected to have put pressure on fiscal third-quarter margins. The company expects the homebuilding gross margin to be 23.5-24%, pointing to a decline from 29.2% a year ago.
Although Lennar has been focusing on continuous improvement of the homebuilding selling, general and administrative (SG&A) line, owing to operating leverage and investments in technology, lower sales are expected to put pressure on operating leverage. The company expects SG&A expenses, as a percentage of home sales, to be within 6.7-6.8%. In the last year, the metric was recorded at 5.8%.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Lennar this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of -3.09%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Currently, Lennar carries a Zacks Rank #2.
Stocks With the Favorable Combination
Here are some companies in the same space that, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported.
Dream Finders Homes, Inc. (DFH - Free Report) has an Earnings ESP of +0.86% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dream Finders Homes is expected to register a 7.8% decline in earnings for the to-be-reported quarter. DFH reported better-than-expected earnings in two of the last four quarters and missed on the other two occasions, the average surprise being 122.7%.
Sterling Infrastructure, Inc. (STRL - Free Report) has an Earnings ESP of +0.67% and sports a Zacks Rank #1.
Sterling is expected to register a 27.8% increase in earnings for the to-be-reported quarter. The company reported better-than-expected earnings in two of the last four quarters and missed on the other two occasions, the average negative surprise being 0.6%.
Primoris Services Corporation (PRIM - Free Report) has an Earnings ESP of +2.83% and carries a Zacks Rank #2.
Primoris’ earnings for the to-be-reported quarter are expected to be down 20.5% from the year-ago level. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 104.4%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.