Lennar Exceeds Revenue Predictions Yet Misses Earnings Target Due to Discount-Driven Home Sales Increase
Lennar's Second-Quarter Results: A Mixed Bag of Revenue, Profit, and New Orders
Shares of Lennar Corp. (LEN) saw a surge in premarket trading on Wednesday, following a somewhat disappointing second-quarter report. Despite revenues surpassing analysts' expectations, profits, new orders, and average sale prices missed the mark.
On Monday evening's financial announcement, the homebuilder reported earnings per share (EPS) of $1.81. Although this beat the expectations of $1.96, it was lower than the same period last year. The revenue also fell to $8.38 billion, a more than 4% decrease from the previous year. While this figure surpassed analysts' predictions of $8.29 billion, it's a notable drop compared to the previous year.
Lennar's new order count totaled 22,601, with 20,131 home deliveries. However, analysts anticipated 22,934 new orders and 20,019 deliveries. The average sales price came in at $389,000, compared to the predicted $400,690. This figure marks a shift in Lennar's strategy to address affordability concerns in the housing market.
Stuart Miller, Lennar's co-CEO, commented on the housing market's current state, "...due to affordability challenges and a decline in consumer confidence, we've continued our strategy of driving starts, sales, and closings to create long-term efficiencies in our business."
Looking ahead to the third quarter, Lennar projects 22,000 to 23,000 new orders and a similar number of deliveries, with an average sales price of $380,000 to $385,000. Analysts had forecasted 22,542 new orders and 23,645 deliveries with an average sales price of $398,260.
As of Wednesday, Lennar shares, which have dropped 17% this year, have climbed 2% before the market opens.
Dive Deeper:For insights into Lennar's adjusted EPS, net earnings, new orders, average sale price performance, and more, check out our website.
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In light of the disappointing second-quarter report, Lennar might consider diversifying its business to industries such as finance or real-estate, as additional revenue streams could help balance the losses in the housing market. If Lennar delves into the finance sector, it could introduce investment opportunities like ICOs to increase its overall revenue. Furthermore, given the affordability challenges in the housing market, Lennar could explore trading in more affordable properties to maintain its market presence and meet investors' expectations.
