Lennar Corporation ($LEN) Earnings (Q3 FY22)

 Lennar Corporation ($LEN) Earnings and Opinion:


Lennar Corporation is a company in the Consumer Cyclical sector and operates in the Residential Construction industry. The company operates as a homebuilder primarily under the Lennar brand in the United States. Lennar Corporation was founded in 1954 and is currently headquartered in Miami, Florida. The company made its debut on the stock market in 1972.

Lennar Corporation Earnings Results:

  • Revenues of $8.943B missing expectations of $8.97B
  • HB Gross Margin of 29.2% beating expectations of 28.8%
  • Adjusted EPS of $5.18 beating expectations of $4.86
  • Guidance for Deliveries and Orders topped guidance
  • HB Gross Margin guidance missed consensus estimates.
Opinion:
Lennar Corporation stock is currently rising this afternoon. The company reported earnings after the closing bell this afternoon. The company had a mixed earnings report with some misses, but some beats on important metrics. In comparison to competitor KB Home ($KBH), Lennar definitely looks to be in a better position. However, there is one key macroeconomic component that could drastically hurt both of these companies in the short term. We already see it apparent in the earnings report that Lennar released. Deliveries and Orders both missed expectations for Lennar, but they guided above consensus estimates in both of these metrics for Q4. We are seeing mortgage rates rise to levels that we saw during the housing bubble in 2008. Construction and other things to produce these homes are seeing significant increase in costs. I can see a downturn headed for these construction companies in the near term. As far as valuation goes, the P/E ratio is low at 5.18 and the P/S ratio is at 0.70. The margins are thin, due to the industry the company is in. Sales and earnings are both down from pervious years. In my opinion, I would stay out of this one, especially in the short-term. I think construction has a lot to overcome, especially with the slowing down in the home building market. If a bubble and crash does come about, we could see multiple years of recovery. I think some downside can come with this company, and you may be able to scoop up these companies for even cheaper prices. I am weary of the Forward P/E ratio, as it is the same as the current P/E ratio. This shows no current signs of earnings growth, which is a bad sign as an investor. I am going to stay out of Lennar for now.


*Information from finviz, Consensus Gurus, Yahoo Finance, 

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