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In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 12.7% and 2.4%, respectively. It is to be noted that this Miami-based homebuilder surpassed earnings expectations in the trailing 18 quarters.
On a year-over-year basis, fiscal third-quarter earnings and revenues decreased 24.5% and 2.3%, respectively.
The Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has increased to $4.64 from $4.63 in the past 30 days. The estimated figure indicates a decrease of 7.6% from $5.02 reported in the year-ago quarter.
The consensus mark for revenues is pegged at $10.34 billion, suggesting 1.6% growth from the year-ago reported figure of $10.17 billion.
Let’s see how things have shaped up for this company.
Lennar’s fiscal fourth-quarter home sales are expected to have increased from the year-ago level, given higher deliveries. The volatile mortgage rate environment since March 2022 and uncertain macroeconomic conditions have been taking a toll on the industry and on Lennar’s performance, leading to comparatively low demand.
Our model predicts home sales to increase 2.5% year over year to $9.89 billion in the quarter. Homebuilding revenues are expected to be $9.93 billion, up 1.9% year over year.
On the fiscal third-quarter earnings call, LEN highlighted that it expects home deliveries of 21,500-22,500 units with ASP to be the same as the fiscal third quarter’s level ($448,000) (suggesting a decline from $483,000 a year ago). Meanwhile, our estimate for deliveries for the to-be-reported quarter is currently pegged at 22,073 homes, indicating a rise of 10% from 20,064 units a year ago. We expect the ASP of the delivered units to be at $448,100.
Lennar expects new orders in the range of 16,200-17,200, pointing to growth from 13,200 reported in fourth-quarter fiscal 2022. Our estimate for new orders is currently pegged at 17,151 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 16,399 homes or $7.03 billion compared with the year-ago quarter’s figures of 18,869 units or $8.74 billion.
That said, higher inflationary pressure and higher land, labor and raw material costs are expected to have put pressure on fiscal fourth-quarter margins. The company expects the homebuilding gross margin to be 24.4-24.6%, pointing to a decline from 24.8% 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 6.7-6.9%. In the last year, the metric was recorded at 5.8%.
What the Zacks Model Unveils
Our proven model predicts 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 exactly the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of +1.15%. 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.
Other 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.
DHI is expected to register a 3.6% rise in earnings for the to-be-reported quarter. DHI reported better-than-expected earnings in all the last four quarters, the average surprise being 28.9%.
KB Home (KBH - Free Report) has an Earnings ESP of +1.19% and presently carries a Zacks Rank #3.
KBH is expected to register a 32.4% decrease in earnings for the to-be-reported quarter. The company reported better-than-expected earnings in three of the last four quarters and missed on the other one occasion, the average surprise being 26.7%.
PulteGroup (PHM - Free Report) has an Earnings ESP of +0.27% and presently carries a Zacks Rank #3.
PHM’s earnings for the to-be-reported quarter are expected to be down 11.9% from the year-ago level. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 21%.
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Can Lennar (LEN) Retain Its Beat Streak in Q4 Earnings?
Lennar Corporation (LEN - Free Report) is slated to report fourth-quarter fiscal 2023 results (ended Nov 30) after the closing bell on Dec 14.
In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 12.7% and 2.4%, respectively. It is to be noted that this Miami-based homebuilder surpassed earnings expectations in the trailing 18 quarters.
On a year-over-year basis, fiscal third-quarter earnings and revenues decreased 24.5% and 2.3%, respectively.
The Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has increased to $4.64 from $4.63 in the past 30 days. The estimated figure indicates a decrease of 7.6% from $5.02 reported in the year-ago quarter.
The consensus mark for revenues is pegged at $10.34 billion, suggesting 1.6% growth from the year-ago reported figure of $10.17 billion.
Let’s see how things have shaped up for this company.
Lennar Corporation Price and EPS Surprise
Lennar Corporation price-eps-surprise | Lennar Corporation Quote
Factors to Note
Lennar’s fiscal fourth-quarter home sales are expected to have increased from the year-ago level, given higher deliveries. The volatile mortgage rate environment since March 2022 and uncertain macroeconomic conditions have been taking a toll on the industry and on Lennar’s performance, leading to comparatively low demand.
Our model predicts home sales to increase 2.5% year over year to $9.89 billion in the quarter. Homebuilding revenues are expected to be $9.93 billion, up 1.9% year over year.
On the fiscal third-quarter earnings call, LEN highlighted that it expects home deliveries of 21,500-22,500 units with ASP to be the same as the fiscal third quarter’s level ($448,000) (suggesting a decline from $483,000 a year ago). Meanwhile, our estimate for deliveries for the to-be-reported quarter is currently pegged at 22,073 homes, indicating a rise of 10% from 20,064 units a year ago. We expect the ASP of the delivered units to be at $448,100.
Lennar expects new orders in the range of 16,200-17,200, pointing to growth from 13,200 reported in fourth-quarter fiscal 2022. Our estimate for new orders is currently pegged at 17,151 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 16,399 homes or $7.03 billion compared with the year-ago quarter’s figures of 18,869 units or $8.74 billion.
That said, higher inflationary pressure and higher land, labor and raw material costs are expected to have put pressure on fiscal fourth-quarter margins. The company expects the homebuilding gross margin to be 24.4-24.6%, pointing to a decline from 24.8% 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 6.7-6.9%. In the last year, the metric was recorded at 5.8%.
What the Zacks Model Unveils
Our proven model predicts 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 exactly the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of +1.15%. 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.
Other 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.
D.R. Horton (DHI - Free Report) has an Earnings ESP of +0.78% and currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
DHI is expected to register a 3.6% rise in earnings for the to-be-reported quarter. DHI reported better-than-expected earnings in all the last four quarters, the average surprise being 28.9%.
KB Home (KBH - Free Report) has an Earnings ESP of +1.19% and presently carries a Zacks Rank #3.
KBH is expected to register a 32.4% decrease in earnings for the to-be-reported quarter. The company reported better-than-expected earnings in three of the last four quarters and missed on the other one occasion, the average surprise being 26.7%.
PulteGroup (PHM - Free Report) has an Earnings ESP of +0.27% and presently carries a Zacks Rank #3.
PHM’s earnings for the to-be-reported quarter are expected to be down 11.9% from the year-ago level. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 21%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.