Lennar Earnings Beat Estimates on Renewed Economic OptimismBy
New orders climbed 12% in fiscal first quarter, company says
Homebuilder cites ‘renewed optimism, wage and job growth’
Lennar Corp., the second-largest U.S. homebuilder, reported fiscal first-quarter earnings that beat analysts’ estimates and said new orders increased, signaling the start to a strong spring selling season.
Lennar is riding a wave of buyer confidence as job growth picks up and the supply of previously owned properties is the tightest it’s ever been. New orders climbed 12 percent from a year earlier, the Miami-based company said in a statement Tuesday. That beat the consensus estimate of a 7.7 percent increase, Robert Wetenhall, an analyst with RBC Capital Markets LLC in New York, said in a note to clients.
Construction of new single-family homes in the U.S. rose 6.5 percent in February to an 872,000 annual pace, the fastest rate since October 2007, according to Commerce Department data.
The company delivered 5,453 homes in the quarter, up 13 percent from a year earlier. Revenue from home sales increased 13 percent to $2 billion. Gross margins were 21.1 percent in the first quarter compared with 22.7 percent a year earlier.
Gross margins “were well below our 22.3 percent estimates,” Megan McGrath, an analyst at MKM Holdings LLC, said in a note to investors.
Lennar shares fell 2.4 percent to $51.41 at 10:17 a.m. in New York.
Net income for the three months through February was $130.8 million, or 56 cents a share, compared with $144.1 million, or 63 cents, a year earlier, the company said Tuesday. The average estimate of 12 analysts was for earnings of 55 cents a share, according to data compiled by Bloomberg.
“Since November we have seen a combination of renewed optimism, wage and job growth, and consumer confidence,” Chief Executive Officer Stuart Miller said in the statement. “As a result, our homebuilding operations have gone from slow and steady to a faster-than-expected sales pace.”