Lennar (LEN) stock is trading notably lower Friday even after the homebuilder beat top- and bottom-line expectations for its fiscal third quarter.
In the three months ended August 31, Lennar's revenue increased 7.9% year-over-year to $9.4 billion, driven in part by a 16% jump in deliveries to 21,516 homes. Meanwhile, the average sale price of homes delivered fell by 5.8% to $422,000.
Lennar also said earnings per share were up 10% over the year-ago period to $4.26.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"We are pleased to report another solid quarter backed by an economic environment that remains very constructive for homebuilders," said Lennar CEO Stuart Miller in a statement. "Employment was strong, housing supply remained chronically short due to production deficits of over a decade, and demand was solid, driven by strong household formation."
The executive adds that while affordability continued to be tested over the three-month period, "purchasers remained responsive to increased sales incentives, resulting in a 16% increase in our deliveries and a 5% increase in our new orders year over year."
Lennar's top- and bottom-line results came in ahead of analysts' expectations. Wall Street was anticipating revenue of $9.2 billion and earnings of $3.63 per share, according to CNBC.
For the fourth quarter of its current fiscal year, Lennar said it anticipates new orders in the range of 19,000 to 19,300 homes and home deliveries in the range of 22,500 to 23,000, which is in-line with analysts' expectations, according to Barron's. However, the company said it expects its gross margin on home sales to be flat from the third quarter at 22.5%, which came in below expectations of 24.4%.
"We continue to remain enthusiastic about our current execution and our future," Miller said. "We will continue to fortify our balance sheet with significant liquidity and operate from a position of strength, thus enabling us to continue to execute on our core strategies to drive strong cash flow and higher returns."
Is Lennar stock a buy, sell or hold?
Lennar has outperformed the broader market on the price charts so far in 2024, up 30% on a total return basis (price change plus dividends) vs the S&P 500's 21% gain. And Wall Street remains upbeat toward the consumer discretionary stock.
According to S&P Global Market Intelligence, the consensus recommendation among the analysts following the stock that it tracks is a Buy.
However, analysts' price targets have struggled to keep up with LEN’s run higher in 2024. Currently, the average analyst price target of $183.47 is right around where the stock is trading today.
Financial services firm UBS Global Research is one of those with a Buy rating on the large-cap stock, along with an above-average price target of $195.
"Despite the mixed quarter and outlook, we believe the setup for LEN and the homebuilders remains decidedly favorable, particularly as interest rates trend lower," says UBS Global Research analyst John Lovallo. "Management characterized current home buying activity as strong, with the expectation for even greater and more broad-based strength as rates move lower, which is consistent with our view."
The analyst adds that it's encouraging that the company's third-quarter stock buybacks, which totaled $519 million, puts Lennar on pace to repurchase at least $2 billion in shares this fiscal year.
Related Content
-
Farewell Paper I-Bonds: Savings Bonds Are Going Online-OnlyThe last remaining way to buy a paper savings bond in the U.S. (with your income tax refund) won't be available from January 2025. Tax filers will still be able to buy I-bonds online, however.
-
Is Medicare a Good Reason to Wait Until 65 to Retire?The average retirement age is 62, but many people wait until Medicare starts at 65. Should health care be the key driver of your retirement date?
-
Farewell Paper I-Bonds: Savings Bonds Are Going Online-Only
The last remaining way to buy a paper savings bond in the U.S. (with your income tax refund) won't be available from January 2025. Tax filers will still be able to buy I-bonds online, however.
-
Is Medicare a Good Reason to Wait Until 65 to Retire?
The average retirement age is 62, but many people wait until Medicare starts at 65. Should health care be the key driver of your retirement date?
-
Late to Retirement Planning? Four Ways to Help Catch UpIf you're afraid you're behind in saving for retirement, it's important to act. You can do something. Here are four ways to help get back on track.
-
How This Vanguard Emerging Markets Bond Fund Outperforms Its PeersThe Vanguard Emerging Markets Bond Fund took a cautious positioning at the start of the year, which has helped it beat the majority of its peers.
-
Five Windows of Opportunity for Roth ConversionsWhen you convert a traditional IRA to a Roth IRA matters if you want to limit how much you pay in taxes.
-
Stock Market Today: Stocks Rise After Strong September Jobs ReportStocks were choppy Thursday as investors took in a higher-than-expected rise in jobless claims and strong growth in the services sector.
-
Strong September Jobs Report Puts Soft Landing in Sight: What the Experts Are SayingJobs Report A blowout reading on nonfarm payrolls takes another jumbo-sized cut to interest rates off the table.
-
Spirit Airlines Stock Plunges on Bankruptcy Buzz: What to KnowSpirit Airlines is one of the worst stocks Friday as reports swirl that the discount airline could file for bankruptcy.
