Florida-based Lennar Corp. (LEN) has reported excellent financial results for the fiscal fourth quarter ended November 30. The company builds affordable, move-up and active adult homes. It also provides real estate-related financial and investment management services.
Shares of Lennar closed 4.1% down on Thursday. The stock lost another 0.2% in the extended trading session to end the day at $108.25.
Earnings and Revenues
LEN stock earnings came in at $4.36 per share, higher than the Street’s estimate of $4.15 per share and the year-ago figure of $2.82 per share.
Revenues rose 24% year-over-year to $8.4 billion, exceeding analysts’ expectations of $8.2 billion.
Homebuilding Segment
Revenues from home sales jumped 26% year-over-year to $8 billion due to a rise in the average sales price and the number of home deliveries.
New home deliveries surged 11% to 17,819, and the average sales price of homes delivered increased 14% to $448,000.
New orders grew 2% to 15,539 homes and backlog rose 26% to 23,771 homes.
Other Highlights
The Financial Services segment’s operating earnings declined to $111.4 million from $151.2 million in the fourth quarter of 2020.
Additionally, operating earnings for the Multifamily segment totaled $9.3 million, compared to $26.7 million in the previous year.
Management Comments
The Co-CEO and Co-President of Lennar, Rick Beckwitt, said, “Our land lighter model resulted in incremental cash flow generation during the fourth quarter which we used towards the repurchase of 10 million shares of our common stock for just under $1 billion, and debt reduction of $850 million. These transactions, combined with our significant earnings, contributed to a return on equity of over 22%.”
The Executive Chairman of Lennar, Stuart Miller, said, “While our new orders grew a controlled 2% compared to last year’s seasonally strong fourth quarter, we achieved a homebuilding gross margin of 28% and homebuilding SG&A of 6%, leading to a 22% net margin, all of which are all-time company records.”
“As we look forward to 2022, we expect to deliver approximately 67,000 homes with a 27.0% – 27.5% gross margin for the year, with more or less 12,500 homes at a gross margin of approximately 26.75% in the first quarter,” Miller added.
Guidance
For the first quarter of Fiscal Year 2022, the company anticipates new orders in the range of 14,800 to 15,100 and Financial Services segment’s operating earnings to lie between $85 million and $90 million.
Further, it expects operating earnings for the Financial Services segment to range from $440 million to $450 million for Fiscal Year 2022.
Wall Street’s Take
On December 17, JMP Securities analyst Aaron Hecht maintained a Buy rating on the stock with a price target of $130 (20% upside potential).
Overall, the stock has a Strong Buy consensus rating based on 9 Buys and 3 Holds. The average Lennar stock forecast of $125.83 implies 16% upside potential. Shares have gained 46% year-to-date.
Bloggers’ Opinion
TipRanks data shows that financial blogger opinions are 95% Bullish on the stock, compared to the sector average of 70%.
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