Lennar Second-Quarter Results Beat Expectations

Housebuilding company Lennar (LEN) said that it expects to see margin improvement over the next two quarters as it posted better-than-expected results for its second quarter, which were supported by increases in new orders and deliveries.

The Miami-headquartered company generated revenue of $5.56 billion in the period ended May 31, up from $5.46 billion in the corresponding quarter of the prior year, according to results published on Tuesday. This was comfortably ahead of the consensus estimate of analysts polled by Capital IQ for $5.13 billion.

The results were supported by what the company described as “favorable underlying fundamentals,” with new orders and deliveries improving by 1% and 5%, respectively, in the second quarter.

During the second quarter, Lennar said that it had continued to experience cost pressures due to land and labor shortages. It said that these cost pressures were somewhat offset by a decrease in lumber prices and the benefit of synergies from its CalAtlantic acquisition. A combination of additional lumber savings and direct cost synergies are expected to support the margin improvement that the company projects in the next two quarters.

Earnings per share came in at $1.30, up from $0.94 in the corresponding quarter of the prior year, and were also ahead of the Street’s forecast for $1.14 per share.

“The well-documented market pause in the second half of 2018 set the stage for more moderate home price increases and lower interest rates which stimulated both affordability and demand, leading homebuyers back to the market,” Stuart Miller, executive chairman of Lennar, said.

“With a solid balance sheet, leading market positions and continued execution of our core operating strategies, we believe that we are well positioned to produce strong results throughout 2019,” Miller said.

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