Lennar Earnings Beat Estimates With More Sales, Higher Prices

Lennar Corp. (NYSE: LEN) reported fiscal first-quarter 2016 results before markets opened Tuesday. The homebuilder reported diluted earnings per share (EPS) of $0.63 on total revenues of $1.99 billion. In the same period a year ago, Lennar reported EPS of $0.50 on revenue of $1.44 billion. First-quarter results also compare to consensus estimates for EPS of $0.52 and revenues of $1.86 billion.

Quarterly revenue from new home sales rose 25% compared with the first quarter of 2015 to $1.8 billion, primarily as a result of a 12% increase in the number of home deliveries, excluding unconsolidated entities, and a 12% increase in the average sales price of homes delivered. Lennar delivered 4,806 homes in the quarter, well above the 4,301 delivered in the same quarter of 2014.

Sales incentives fell from $21,800 a year ago to $21,600 in the first quarter of this year. In the fourth quarter of 2015, the average sales incentive was $21,700. As a percentage of the sales price, incentives fell from 6.3% per home in the year-ago quarter to 5.9%.
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The company’s CEO, Stuart Miller, said:

We are very pleased with our first quarter results as we achieved pre-tax earnings of $201.7 million, our highest first quarter pre-tax earnings since 2006. …  In the first quarter of 2016, our average sales price of homes delivered increased 12% year-over-year to $365,000, the highest in the Company’s history, from $326,000 in the first quarter of 2015. Our home sales revenues and new orders dollar value increased 25% and 15%, respectively, compared to the same period last year. Our sales backlog dollar value increased 19% from last year to approximately $2.8 billion, keeping us well positioned going forward.

The company offered no guidance, but reported that its backlog of new homes at the end of the quarter totaled 7,670, up 13% from the same period a year ago. The consensus analysts’ estimates for the current quarter call for EPS of $0.90 and revenues of $2.64 billion. For the full year, EPS is expected to reach $3.80 on revenues of $10.81 billion.

Shares closed Monday at $46.70, in a 52-week range of $37.14 to $56.04, and were inactive in Tuesday morning’s premarket session. The consensus price target on the stock was $53.73 before these results were announced.