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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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
-
Dow Erases 717-Point Gain to End Lower: Stock Market TodayThe main indexes started the day with solid gains, but worries of an AI bubble weighed on stocks into the close.
-
6 Changes to IRAs, 401(k)s and HSAs in 2026Changes to IRAs — Roth and traditional — and 401(k)s may mean more money for you in retirement.
-
Dow Erases 717-Point Gain to End Lower: Stock Market Today
The main indexes started the day with solid gains, but worries of an AI bubble weighed on stocks into the close.
-
The Delayed September Jobs Report Is Out. Here's What It Means for the FedThe September jobs report came in much higher than expected, lowering expectations for a December rate cut.
-
Still Working While Receiving Social Security? A Financial Adviser's Guide to the Earnings TestIf you haven't reached your full retirement age yet, your Social Security check could take a hit, depending on how much you earn.
-
I'm an Attorney and a CPA: Charitable Giving Just Got a Little Easier, But Also a Little HarderThe OBBB shakes up charitable deductions with a little help for non-itemizers and a new challenge for itemizers this holiday season.
-
S&P 500 Snaps Losing Streak Ahead of Nvidia Earnings: Stock Market TodayThe Dow Jones Industrial Average also closed higher for the first time in five days, while the Nasdaq Composite notched a win too.
-
This HECM-QLAC Power Move Can Unlock Guaranteed Retirement IncomeCombining a qualified longevity annuity contract (QLAC) with a home equity conversion mortgage (HECM) can significantly boost your retirement income and more.
-
I'm a Financial Planner: Coast FI Planning Could Be High Earners' Secret Retirement Weapon in the AI AgeA subset of the FIRE movement, Coast FI can help executives figure out whether their investments are enough to 'coast' so they can retire early and comfortably.
-
Dow Trims Its Loss to 498 Points: Stock Market TodayMarkets are wondering more and more about returns on the enormous amounts of capital hyperscalers are investing in AI.
