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Lennar Corporation beats analysts’ estimates for revenue and earnings per share in the fourth quarter

Michael Harris
  • January 9th, 19:59
  • Last Updated: January 9th, 20:00
  • Lennar Corporation expects to sell 54-55K homes in 2020 against the analysts' estimate of 53,954.
  • Lennar expects the full-year gross margins between 20.5% to 21%.
  • Lower mortgage rates following 3 consecutive rate cuts by the U.S Fed fueled the housing market.
  • Lennar Corporation beat analysts' estimate for EPS and revenue in the fourth quarter.
  • Lennar gained around 43% in the stock market in 2019.

The U.S home construction and real estate company, Lennar Corporation, announced its forecast for home sales in 2020 on Wednesday that was reported significantly higher than the analysts’ estimate. The company cited lower home prices as well as mortgage rates to be contributing to the rising demand that is likely to push the sales figure higher for the company. Following the release of the latest forecasts, share prices were seen trading 3% higher later on Wednesday.

Lennar Corporation Is Expecting To Deliver 54-55K Homes In 2020

Based on Refinitiv’s data, analysts had previously capped the sales figure for the second largest homebuilder in the United States at 53,954 units. As per the company’s recent forecast, however, it is now anticipating as much higher 54,000 to even 55,000 homes to be delivered in 2020. Analysts had also anticipated Lennar Corporation’s annual gross margins at 20.30% for 2020. As per the company’s estimate, however, the full-year gross margins are likely to lie between 20.5% to 21%.

Discussing the gross margins, the company further added that the costs of labor and raw material has not posted a significant change and that Lennar Corporation is focused at minimizing its construction spend.

As per the analysts, following the three consecutive rate cuts by the U.S Federal Reserve, the housing market has recently been catching steam that saw mortgage rates to note sharp declines from the record high that was recorded in 2018. Lennar’s CEO, Rick Beckwitt, commented on Wednesday:

“During the fourth quarter, the basic underlying housing market fundamentals of low unemployment, higher wages and low inventory levels remained favorable.”

Lennar Corporation’s Performance In The Fourth Quarter

In the fourth quarter, Lennar Corporation beat the analysts’ estimates for revenue and profit. Selling 16,420 homes, the home construction and real estate company posted an over 15% growth in sales as compared to that of last year when it delivered 14,154 homes. The average price in the fourth quarter, however, saw a drop of 6.7% to $393,000.

The future demand, on the other hand, saw a 23.4% increase in the fourth quarter. The company, however, was hit on the net income front, that dropped to $2.13 earnings per share in the quarter as compared to a relatively higher $2.42 per share in the same quarter last year. Lennar’s revenue rose by 8% and was printed at $6.97 billion. The EPS and revenue figures, however, were better than the analysts’ forecast of $6.55 billion in revenue and $1.90 of earnings per share.

Lennar Corporation has gained around 43% in the stock market in 2019. The stock is currently exchanging hands at around $59.0 per share.

About the author

Michael Harris
Michael Harris
I began trading in my early 20's at a local company and since then have combined my knowledge and love of content to become a news writer. I am passionate about bringing insightful articles to readers and hope to add some value to your portfolios!

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