Lennar Earnings Beat Estimates With Higher Sales, Prices

Lennar Corp. (NYSE: LEN) reported fourth-quarter and fiscal 2015 results before markets opened Friday morning. The homebuilder reported quarterly diluted earnings per share (EPS) of $1.21 on total revenues of $2.95 billion. In the same period a year ago, Lennar reported EPS of $1.07 on revenue of $2.58 billion. Fourth-quarter results also compare to consensus estimates for EPS of $1.11.

For the full year, Lennar reported EPS of $3.46 on revenues of $9.47 billion, compared with fiscal year 2014 EPS of $2.80 and revenues of $7.78 billion. Analysts were looking for EPS of $3.37.

Quarterly revenue from new home sales rose 16% compared with the fourth quarter of 2014 to $2.6 billion, primarily as a result of a 9% increase in the number of home deliveries, excluding unconsolidated entities, and a 6% increase in the average sales price of homes delivered. Lennar delivered 7,605 homes in the quarter, well above the 6,948 delivered in the same quarter of 2014.

Sales incentives fell from $23,100 a year ago to $21,700 in the fourth quarter of this year. In the third quarter of 2015, the average sales incentive was $20,700. As a percentage of the sales price, incentives fell from 6.6% per home in the year-ago quarter to 5.9%.
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The company’s CEO, Stuart Miller, said:

While the Federal Reserve announced the first interest rate increase in nine years, it stated that the increase was a sign of confidence in the economy. We believe that improving employment levels, wage growth and consumer confidence will continue to keep the housing market on its slow and steady recovery. Thus, we believe we are very well positioned to achieve another year of company-wide improvement in 2016.

The company offered no guidance, but reported that its backlog of new homes at the end of the quarter totaled 6,646, up about 14% from the same period a year ago. The backlog’s dollar value totals $2.48 billion, up 25% from the same period a year ago. The consensus estimates from MarketWatch calls for EPS of $0.59 for the current quarter and full-year EPS of $3.75.

Shares closed Thursday at $48.68, in a 52-week range of $41.25 to $56.04, and were inactive Friday morning. MarketWatch had an average analyst price target of $54.00 before the results were announced.