Lennar Corporation (LEN Quick QuoteLEN - Free Report) reported weaker-than-expected third-quarter fiscal 2026 (ended Aug. 31) results. The quarter’s adjusted earnings and total revenues missed the Zacks Consensus Estimate and declined year over year.

The ongoing softness in housing demand, resulting in lower deliveries and a weaker average sales price (ASP) for homes delivered, led to declining quarterly results.

LEN stock trickled down 2.1% during yesterday’s after-hours trading session, following the earnings announcement.

LEN’s Quarterly Numbers

Adjusted earnings of $1.23 per share missed the Zacks Consensus Estimate of $1.29 by 4.7% and fell 38.5% from $2.00 per share a year ago.

Total revenues of $8.05 billion missed the consensus estimate of $8.33 billion by 3.4% and declined 8.6% year over year. Lower deliveries and home prices weighed on results amid affordability pressure. Inventory turn stood at 2.4 times.

Lennar Corporation Price, Consensus and EPS Surprise

Lennar Corporation price-consensus-eps-surprise-chart | Lennar Corporation Quote

Lennar’s Homebuilding Highlights

Homebuilding revenues decreased 6% year over year to $7.76 billion from $8.25 billion. Revenues from home sales fell to $7.73 billion from $8.21 billion, reflecting weaker pricing and fewer closings.

Home deliveries declined 3.4% to 20,840 from 21,584 but remained within management's guidance of 20,500-21,500 homes. The ASP of homes delivered decreased 2.9% to $372,000 from $383,000. Management said pricing reflected about 12% in incentives, along with base-price adjustments aimed at sustaining volume.

New orders fell 9.2% year over year to 20,879 homes. Their dollar value decreased 11.1% to $7.5 billion from $8.44 billion, while the ASP of new orders declined to $359,000 from $367,000.

Backlog slipped 0.6% to 16,857 homes from 16,953. The backlog value declined 4.6% to $6.35 billion from $6.65 billion, while the average sales price in backlog fell to $376,000 from $392,000. Active communities increased to 1,713 from 1,664.

Gross margin on home sales contracted to 15.8% from 17.5% a year ago. Lower revenue per square foot and higher land costs contributed to the decline, partly offset by lower construction costs from ongoing cost-saving initiatives. Selling, general and administrative (SG&A) expenses rose to 9.2% of home sales from 8.2%, mainly because of lower revenue leverage and higher marketing and selling costs. Net margin on home sales was 6.6%. Construction cost per square foot improved 6% year over year, while cycle time fell to a record 116 days from 126 days.

Lennar's Financial Services & Other Segments Diverge

Financial Services revenues declined to $226.1 million from $314.2 million a year ago. Operating earnings decreased to $129 million from $177 million. The current quarter included $39 million of net one-time items, primarily tied to a litigation accrual reversal following a court judgment.

Multifamily revenues fell to $38.5 million from $228.5 million, while its operating loss narrowed to $3 million from $16 million.

Lennar Other revenues rose to $22 million from $13.9 million, but the segment posted an $84 million operating loss against $62 million of operating earnings a year ago, largely due to $53 million of mark-to-market losses on technology investments.

LEN's Balance Sheet Shows Higher Leverage

Homebuilding cash and cash equivalents totaled $1.15 billion at quarter-end. Lennar had $650 million of borrowings outstanding under its $3.1 billion revolving credit facility. Homebuilding debt to total capital was 16.6% compared with 13.5% a year earlier.

The company repurchased 3 million shares for $256 million at an average price of $85.49 and redeemed $400 million of 5.25% senior notes due June 2026. Of roughly 488,000 homesites owned and controlled, less than 2.5% were owned on the balance sheet.

Lennar's Q4 Outlook Reflects Continued Market Pressure

For the fourth quarter of fiscal 2026, Lennar expects new orders of 19,500-20,500 homes and deliveries of 22,000-23,000 homes. The ASP is projected between $370,000 and $380,000.

Gross margin on home sales is expected at 15.5-16%, while SG&A is projected at 8.7-9% of home sales. Financial Services operating earnings are forecast at $90-$95 million. Management reduced its full-year fiscal 2026 delivery target to about 80,000-81,000 homes from 82,000-83,000, citing continued interest-rate pressure and weaker market conditions.

LEN’s Zacks Rank & Stocks With the Favorable Combination

Lennar currently carries a Zacks Rank #5 (Strong Sell).

Here are some companies in the Zacks Construction sector, which per our model, have the right combination of elements to post an earnings beat in the respective quarters to be reported. 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. 

Quanta Services, Inc. (PWR Quick QuotePWR - Free Report) currently has an Earnings ESP of +3.66% and a Zacks Rank of 1 presently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Quanta’s earnings have topped in each of the trailing four quarters, the average surprise being 17%. The company’s earnings for the third quarter of 2026 are expected to grow 46.9%.

Everus Construction Group, Inc. (ECG Quick QuoteECG - Free Report) currently has an Earnings ESP of +0.52% and a Zacks Rank of 1.

Everus’ earnings have topped in each of the trailing four quarters, the average surprise being 57%. The company’s earnings for the third quarter of 2026 are expected to grow 15.3%.

Comfort Systems USA, Inc. (FIX Quick QuoteFIX - Free Report) currently has an Earnings ESP of +4.37% and a Zacks Rank of 2.

Comfort Systems’ earnings beat estimates in each of the last four quarters, the average surprise being 34.6%. The company’s earnings for the third quarter of 2026 are expected to grow 50.6%.