Post Earnings Coverage as Lennar Revenue Jumped 15 Percent, Earnings Advanced 11 Percent

Upcoming AWS Coverage on Hovnanian Enterprises Post-Earnings Results

LONDON, UK / ACCESSWIRE / December 23, 2016 / Active Wall St. announces its post-earnings coverage on Lennar Corp. (NYSE: LEN). The Company released its fourth quarter and fiscal 2016 financial results on December 19, 2016. The homebuilder topped earnings and revenue expectations for the fourth consecutive quarter. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of Lennar’s competitors within the Residential Construction space, Hovnanian Enterprises, Inc. (NYSE: HOV), reported on December 08, 2016, results for its fiscal fourth quarter and year ended October 31, 2016. AWS will be initiating a research report on Hovnanian Enterprises in the coming days.

Today, AWS is promoting its earnings coverage on LEN; touching on HOV. Get our free coverage by signing up to:

http://www.activewallst.com/registration-3/?symbol=LEN

http://www.activewallst.com/registration-3/?symbol=HOV

Earnings Reviewed

For the three months ended on November 30, 2016, Lennar’s revenue climbed 15% to $3.38 billion from $2.95 billion in Q4 FY15. The Company’s revenue numbers came in above Wall Street’s forecasts of $3.32 billion. During Q4 FY16, Lennar’s new home orders grew 9% on a y-o-y basis to 6,598. The potential value of net orders increased 12% y-o-y to $2.4 billion in the reported quarter.

Q4 FY16 net earnings attributed to Lennar were $313.5 million, or $1.34 per diluted share, compared to $281.6 million, or $1.21 per diluted share, in Q4 FY15. The Company’s earnings numbers also surpassed market estimates of $1.28 per share. Net earnings attributed to Lennar for the year ended November 30, 2016 were $911.8 million, or $3.93 per diluted share, compared to $802.9 million, or $3.46 per diluted share, for the year ended November 30, 2015.

Segment Results

Lennar Homebuilding

During Q4 FY16, the Company’s Homebuilding segment’s revenues from home sales increased 11% to $2.9 billion from $2.6 billion in Q4 FY15. Revenues were higher primarily due to an 8% increase in the number of home deliveries, excluding unconsolidated entities, and a 3% increase in the average sales price of homes delivered. New home deliveries, excluding unconsolidated entities, increased to 8,206 homes in Q4 FY16, from 7,605 homes in the year earlier quarter. The average sales price of homes delivered in the reported quarter increased to $357,000 from $347,000 in the year earlier same period.

During Q4 FY16, the segment’s gross margins on home sales were $683.5 million, or 23.3%, compared to $651.1 million, or 24.6%, in Q4 FY15. Selling, general, and administrative expenses were $256.2 million in Q4 FY16 compared to $242.7 million in the year ago same period. As a percentage of revenues from home sales, selling, general, and administrative expenses improved to 8.7% in the reported quarter, from 9.2% in Q4 FY15. At the end of the reported quarter, Homebuilding backlog grew 15% y-o-y to 7,623 homes.

Lennar Financial Services

For Q4 FY16, operating earnings for the Lennar’s Financial Services segment totaled $51.4 million compared to $33.8 million in Q4 FY15. The increase in profitability was primarily due to increased transactions and higher profit per transaction in the segment’s mortgage and title operations.

Rialto

Operating earnings for the Lennar’s Rialto segment were $8.0 million in Q4 FY16 compared to operating earnings in Q4 FY15 of $7.6 million. Revenues in this segment were $81.5 million in the reported quarter compared to $61.2 million in Q4 FY15. Rialto equity in earnings from unconsolidated entities was $4.6 million and $4.7 million in Q4 of FY 2016 and FY15, respectively, related to Rialto’s share of earnings from its real estate funds.

Lennar Multifamily

During Q4 FY16, operating earnings for the Lennar’s multifamily segment were $41.4 million compared to $10.2 million in Q4 FY15. The increase in profitability was primarily due to the segment’s $47.2 million share of gains related to the sale of four operating properties by Lennar multifamily’s unconsolidated entities in Q4 FY16 compared to the segment’s $16.6 million share of a gain as a result of the sale of one operating property by one of its unconsolidated entities in Q4 FY15.

Balance Sheet

As of November 30, 2016, Lennar Homebuilding’s cash and cash equivalents totaled $1.05 billion, up from $893.40 million as of November 30, 2015. Net Lennar Homebuilding’s debt was $3.52 billion at the end of Q4 FY16 compared to $4.13 billion at the end of Q4 FY15. During the reported quarter, Lennar converted the remaining $157 million of its 3.25% convertible senior notes.

Outlook

For FY17, Lennar is forecasting to deliver between 28,500 and 29,000 deliveries. The Company is expecting an average sales price between $365,000 and $370,000 for FY17. For the upcoming fiscal year Lennar is predicting operating margins to be around 13% and gross margin is expected to be in a range of 22% to 22.5%.

Financial Services are expected to be in a range of $155 million to $160 million for the year. Rialto is expected to generate a range of profits between $45 million and $55 million for FY17. Lennar’s multifamily segment expects to sell seven to eight multifamily communities in 2017 with a range of profits between $70 million and $80 million for FY17.

Stock Performance

At the closing bell, on Thursday, December 22, 2016, Lennar’s stock declined 1.27%, ending the trading session at $42.92. A total volume of 1.70 million shares were traded at the end of the day. The stock is trading at a PE ratio of 11.33 and has a dividend yield of 0.37%.

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