Post Earnings Coverage sees Lennar Results Boosted by Solid Growth in Housing Market

LONDON, UK / ACCESSWIRE / June 22, 2016 / ActiveWallSt.com announces its post-earnings coverage on Lennar Corp. (NYSE: LEN). The company announced its Q2 fiscal 2016 financial results before markets opened on Tuesday, June 22, 2016. The second-largest U.S. homebuilder results beat top and bottom line expectations for a second consecutive time in FY16 with double-digit growth in key metrics. Register with us now for your free membership and see our complete earnings coverage on this equity at:

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Earnings Review

For the quarter ended on May 31, 2016, Lennar reported earnings of $218.5 million, up 19% on y-o-y basis. On per-share basis, Lennar’s profit climbed to $0.95 from $0.79 in the year ago period. Analysts were expecting earnings of $0.86 per share. Revenue surged 15% to $2.75 billion on the back of an increase in number of homes delivered and a rise in average sales price (ASP) of the homes delivered, thus beating Analysts’ consensus estimate of $2.53 billion.

Homebuilding Revenues

Lennar’s Homebuilding revenues increased 15.6% on y-o-y basis to $2.45 billion. For Q2 FY16, New home orders increased 10% as compared to the year ago period. Revenue from new home sales rose 17% to $2.4 billion as compared to Q2 FY15, primarily attributed to a 12% rise in the number of home deliveries. In Q2 FY16, the company delivered 6,711 new homes excluding unconsolidated entities as compared to 5,989 new homes delivered in Q2 FY15. The ASP of homes delivered also increased by 4% to $364,000.

Margins

For Q2 FY16, Lennar’s gross margin on home sales declined 70 basis points (bps) to 23.1%, attributed to rising land costs, but was partially offset by higher ASP of homes delivered. Operating margin on home sales increased 10 bps to 13.9% in Q2 FY16. SG&A expenses, as a percentage of sales, improved 70 bps to 9.3% primarily driven by improvement in operating leverage.

Further Growth in the Horizon

Lennar did not provide any guidance, however the Miami-based company reported that its backlog of new homes at the end of the Q2 FY16 equalled 9,014, up 12% from the year ago period. The number of new orders also climbed 9.5% which is a positive indication of future sales.

Lennar’s new orders and larger backlog indicate the U.S. housing market on-going recovery. Housing activity has been fuelled by low mortgage rates, modest wage growth, positive consumer confidence and low unemployment levels, combined with limited inventory, the company stated in the earnings report. According to the S&P/Case-Shiller Home Price Index, for the period of 12 months ending at March 2016, National prices gained 5.2%. Existing home sales have recorded growth for two consecutive months as per the National Association of Realtors,

Stock Performance

Following the earning release before the market open, Lennar shares rose to an intraday high of $48.18, before finishing the trading session at $46.14, down by 1.11%. The company’s stock has gained 4.13% in the past one month as the housing market recovers.

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