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Higher Deliveries, Margins to Aid Lennar's (LEN) Q1 Earnings
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Lennar Corporation (LEN - Free Report) is slated to report results for first-quarter fiscal 2021 (ended Feb 28) after the closing bell on Mar 16.
In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 18.5% and 4.3%, respectively. Notably, this Miami-based homebuilder surpassed earnings expectations in 11 of the trailing 12 quarters.
On a year-over-year basis, earnings and revenues grew 32.4% and 2.1%, respectively.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has increased 1.9% to $1.65 over the past 30 days. The estimated figure indicates an increase of 29.9% from $1.27 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $5.08 billion, suggesting a 12.7% increase from the year-ago reported figure of $4.51 billion.
Let’s see how things have shaped up for this announcement.
Lennar’s fiscal first-quarter Homebuilding revenues (accounting for more than 93% of total revenues) are expected to have improved from the year-ago level due to higher deliveries, given lower borrowing costs, improved economy, more governmental stimulus and vaccination drive.
Overall, lower mortgage rates and demand for affordable housing from multiple demographic groups are likely to have given a boost to its order growth. The company has been shifting the business mix to lower-priced homes. This is expected to have boosted its sales absorption pace to some extent.
The Zacks Consensus Estimate for the company’s Homebuilding revenues is pegged at $4.86 billion, which indicates an increase of 16.6% from the year-ago period.
For the fiscal first quarter, Lennar expects deliveries in the range of 12,200-12,500 homes, indicating an improvement from the year-ago reported figure of 10,321. The consensus estimate for deliveries for the to-be-reported quarter is currently pegged at 12,400 homes, indicating an increase of 20.1% from a year ago. The company expects average sales price to be $390,000, suggesting a 2.7% decline from $401,000 a year ago. Lennar also expects new orders in the 14,500-14,800 range, indicating an increase from 12,376 reported in first-quarter fiscal 2020.
From the margin perspective, lower average sales prices may have impacted Lennar’s margins to some extent. Nonetheless, buoyed by strong demand, home prices have been moving higher. The company expects homebuilding gross margin in the 23.5-23.75% range, pointing to an increase from 20.5% a year ago, mainly on a robust pricing environment.
Also, Lennar has been focusing on controlling construction costs and managing sales price prudently, which may have benefited gross margin in the fiscal first quarter.
Again, Lennar has been focused on continuous improvement in the homebuilding SG&A (selling, general and administrative) line owing to operating leverage and investments in technology. The company expects SG&A expenses, as a percentage of home sales, within 8.9-9%. A year ago, the metric was recorded at 9.2%.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Lennar this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: The company has an Earnings ESP of +7.99%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Currently, Lennar carries a Zacks Rank #2.
Here are some other companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
M.D.C. Holdings, Inc. has an Earnings ESP of +4.81% and a Zacks Rank #2.
NVR, Inc. (NVR - Free Report) has an Earnings ESP of +3.40% and holds a Zacks Rank #3.
Thor Industries, Inc. (THO - Free Report) has an Earnings ESP of +9.29% and a Zacks Rank #2.
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Higher Deliveries, Margins to Aid Lennar's (LEN) Q1 Earnings
Lennar Corporation (LEN - Free Report) is slated to report results for first-quarter fiscal 2021 (ended Feb 28) after the closing bell on Mar 16.
In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 18.5% and 4.3%, respectively. Notably, this Miami-based homebuilder surpassed earnings expectations in 11 of the trailing 12 quarters.
On a year-over-year basis, earnings and revenues grew 32.4% and 2.1%, respectively.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has increased 1.9% to $1.65 over the past 30 days. The estimated figure indicates an increase of 29.9% from $1.27 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $5.08 billion, suggesting a 12.7% increase from the year-ago reported figure of $4.51 billion.
Let’s see how things have shaped up for this announcement.
Lennar Corporation Price and EPS Surprise
Lennar Corporation price-eps-surprise | Lennar Corporation Quote
Factors to Note
Lennar’s fiscal first-quarter Homebuilding revenues (accounting for more than 93% of total revenues) are expected to have improved from the year-ago level due to higher deliveries, given lower borrowing costs, improved economy, more governmental stimulus and vaccination drive.
Overall, lower mortgage rates and demand for affordable housing from multiple demographic groups are likely to have given a boost to its order growth. The company has been shifting the business mix to lower-priced homes. This is expected to have boosted its sales absorption pace to some extent.
The Zacks Consensus Estimate for the company’s Homebuilding revenues is pegged at $4.86 billion, which indicates an increase of 16.6% from the year-ago period.
For the fiscal first quarter, Lennar expects deliveries in the range of 12,200-12,500 homes, indicating an improvement from the year-ago reported figure of 10,321. The consensus estimate for deliveries for the to-be-reported quarter is currently pegged at 12,400 homes, indicating an increase of 20.1% from a year ago. The company expects average sales price to be $390,000, suggesting a 2.7% decline from $401,000 a year ago. Lennar also expects new orders in the 14,500-14,800 range, indicating an increase from 12,376 reported in first-quarter fiscal 2020.
From the margin perspective, lower average sales prices may have impacted Lennar’s margins to some extent. Nonetheless, buoyed by strong demand, home prices have been moving higher. The company expects homebuilding gross margin in the 23.5-23.75% range, pointing to an increase from 20.5% a year ago, mainly on a robust pricing environment.
Also, Lennar has been focusing on controlling construction costs and managing sales price prudently, which may have benefited gross margin in the fiscal first quarter.
Again, Lennar has been focused on continuous improvement in the homebuilding SG&A (selling, general and administrative) line owing to operating leverage and investments in technology. The company expects SG&A expenses, as a percentage of home sales, within 8.9-9%. A year ago, the metric was recorded at 9.2%.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Lennar this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: The company has an Earnings ESP of +7.99%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Currently, Lennar carries a Zacks Rank #2.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks With Favorable Combination
Here are some other companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
M.D.C. Holdings, Inc. has an Earnings ESP of +4.81% and a Zacks Rank #2.
NVR, Inc. (NVR - Free Report) has an Earnings ESP of +3.40% and holds a Zacks Rank #3.
Thor Industries, Inc. (THO - Free Report) has an Earnings ESP of +9.29% and a Zacks Rank #2.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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