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In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 35.9% and 8.1%, respectively. It is to be noted that this Miami-based homebuilder surpassed earnings expectations in the trailing 16 quarters.
On a year-over-year basis, fiscal first-quarter earnings decreased 21% but revenues grew 5%.
The Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has moved up to $2.32 from $2.31 in the past 30 days. The estimated figure indicates a decrease of 50.5% from $4.69 reported in the year-ago quarter. The consensus mark for revenues is pegged at $7.28 billion, suggesting a 12.9% decline from the year-ago reported figure of $8.36 billion.
Let’s see how things have shaped up for this company.
Factors to Note
Lennar’s fiscal second-quarter home sales are expected to have decreased from the year-ago level, owing to the ongoing challenges in the industry comprising a softer demand environment. The increase in mortgage rates since March 2022 and uncertain macroeconomic conditions are playing spoilsport.
We expect home sales to decrease by 16.2% year over year to $6,675.4 million in the quarter. Homebuilding revenues are expected to be $6,775.7 million, down 15.1% year over year.
On the fiscal first-quarter earnings call, LEN highlighted that it expects home deliveries of 15,000-16,000 units at an average price of $435,000-$445,000 (suggesting a decline from $483,000 a year ago).
Meanwhile, the consensus estimate for deliveries for the to-be-reported quarter is currently pegged at 15,619 homes, indicating a decline from 16,549 units a year ago. The consensus mark for the average price is pegged at $442,000.
Lennar expects new orders in the range of 16,000-17,000, pointing to a decrease from 17,792 reported in second-quarter fiscal 2022. The weakness in the overall market might have dented the fiscal second quarter’s order pattern. The consensus estimate for new orders is currently pegged at 16,653 homes, indicating a fall from 17,792 reported a year ago, owing to the softness in housing demand.
The Zacks Consensus Estimate for backlog (units and values) is currently pegged at 20,415 homes or $9.7 billion compared with the year-ago quarter’s figures of 28,624 units or $14.69 billion.
Unprecedented supply-chain issues, increased inflation and higher land, labor and raw material costs are expected to have put pressure on fiscal second-quarter margins. The company expects the homebuilding gross margin to be 21-21.5%, pointing to a decline from 29.5% a year ago.
That said, Lennar has been focusing on continuous improvement of the homebuilding selling, general and administrative (SG&A) line, owing to operating leverage and investments in technology. Yet, lower sales are expected to put pressure on operating leverage. The company expects SG&A expenses, as a percentage of home sales, to be nearly 7.2-7.4%. A year ago, the metric was recorded at 6.1%.
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. This is the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of +2.46%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some other companies in the same space that, according to our model, also have the right combination of elements to post an earnings beat for their respective quarters to be reported.
KB Home (KBH - Free Report) has an Earnings ESP of +5.55% and carries a Zacks Rank #2.
KB Home is expected to register a 47% decline in earnings for the to-be-reported quarter. Notably, KBH reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 12.2%.
D.R. Horton, Inc. (DHI - Free Report) has an Earnings ESP of +1.93% and sports a Zacks Rank #1.
D.R. Horton’s earnings for the to-be-reported quarter are expected to be down 40% from the year-ago level. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 15.3%.
PulteGroup, Inc. (PHM - Free Report) has an Earnings ESP of +5.57% and sports a Zacks Rank #1.
PulteGroup is expected to register an 11% fall in earnings for the to-be-reported quarter. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 15.6%.
Image: Bigstock
What You Need to Note Ahead of Lennar's (LEN) Q2 Earnings
Lennar Corporation (LEN - Free Report) is scheduled to report second-quarter fiscal 2023 results (ended May 31) after the closing bell on Jun 14.
In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 35.9% and 8.1%, respectively. It is to be noted that this Miami-based homebuilder surpassed earnings expectations in the trailing 16 quarters.
On a year-over-year basis, fiscal first-quarter earnings decreased 21% but revenues grew 5%.
The Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has moved up to $2.32 from $2.31 in the past 30 days. The estimated figure indicates a decrease of 50.5% from $4.69 reported in the year-ago quarter. The consensus mark for revenues is pegged at $7.28 billion, suggesting a 12.9% decline from the year-ago reported figure of $8.36 billion.
Lennar Corporation Price and EPS Surprise
Lennar Corporation price-eps-surprise | Lennar Corporation Quote
Let’s see how things have shaped up for this company.
Factors to Note
Lennar’s fiscal second-quarter home sales are expected to have decreased from the year-ago level, owing to the ongoing challenges in the industry comprising a softer demand environment. The increase in mortgage rates since March 2022 and uncertain macroeconomic conditions are playing spoilsport.
We expect home sales to decrease by 16.2% year over year to $6,675.4 million in the quarter. Homebuilding revenues are expected to be $6,775.7 million, down 15.1% year over year.
On the fiscal first-quarter earnings call, LEN highlighted that it expects home deliveries of 15,000-16,000 units at an average price of $435,000-$445,000 (suggesting a decline from $483,000 a year ago).
Meanwhile, the consensus estimate for deliveries for the to-be-reported quarter is currently pegged at 15,619 homes, indicating a decline from 16,549 units a year ago. The consensus mark for the average price is pegged at $442,000.
Lennar expects new orders in the range of 16,000-17,000, pointing to a decrease from 17,792 reported in second-quarter fiscal 2022. The weakness in the overall market might have dented the fiscal second quarter’s order pattern. The consensus estimate for new orders is currently pegged at 16,653 homes, indicating a fall from 17,792 reported a year ago, owing to the softness in housing demand.
The Zacks Consensus Estimate for backlog (units and values) is currently pegged at 20,415 homes or $9.7 billion compared with the year-ago quarter’s figures of 28,624 units or $14.69 billion.
Unprecedented supply-chain issues, increased inflation and higher land, labor and raw material costs are expected to have put pressure on fiscal second-quarter margins. The company expects the homebuilding gross margin to be 21-21.5%, pointing to a decline from 29.5% a year ago.
That said, Lennar has been focusing on continuous improvement of the homebuilding selling, general and administrative (SG&A) line, owing to operating leverage and investments in technology. Yet, lower sales are expected to put pressure on operating leverage. The company expects SG&A expenses, as a percentage of home sales, to be nearly 7.2-7.4%. A year ago, the metric was recorded at 6.1%.
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. This is the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of +2.46%. 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 the Favorable Combination
Here are some other companies in the same space that, according to our model, also have the right combination of elements to post an earnings beat for their respective quarters to be reported.
KB Home (KBH - Free Report) has an Earnings ESP of +5.55% and carries a Zacks Rank #2.
KB Home is expected to register a 47% decline in earnings for the to-be-reported quarter. Notably, KBH reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 12.2%.
D.R. Horton, Inc. (DHI - Free Report) has an Earnings ESP of +1.93% and sports a Zacks Rank #1.
D.R. Horton’s earnings for the to-be-reported quarter are expected to be down 40% from the year-ago level. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 15.3%.
PulteGroup, Inc. (PHM - Free Report) has an Earnings ESP of +5.57% and sports a Zacks Rank #1.
PulteGroup is expected to register an 11% fall in earnings for the to-be-reported quarter. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 15.6%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.