Homebuilder Lennar Q1 revenue misses estimates amid weak market

Overview

• U.S. homebuilder's fiscal Q1 revenue declined and missed analyst expectations

• Company repurchased 2 mln shares for $237 mln during the quarter

Outlook

• Lennar expects Q2 deliveries of 20,000 to 21,000 homes

• Company sees Q2 gross margin on home sales of 15.5% to 16%

• Lennar expects Q2 financial services operating earnings of $100 mln to $110 mln

Result Drivers

• WEAK DEMAND & AFFORDABILITY - Co said high mortgage rates, constrained affordability, and cautious consumer sentiment continued to weigh on the housing market

• LOWER PRICES & INCENTIVES - Revenues declined due to an 8% decrease in average sales price and increased use of sales incentives to sustain volume

• MARGIN PRESSURE - Gross margins fell due to lower revenue per square foot and higher land costs, partially offset by lower construction costs

Company press release: ID:nPn15lp7na

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 3 "strong buy" or "buy", 10 "hold" and 7 "sell" or "strong sell"

• The average consensus recommendation for the homebuilding peer group is "buy."

• Wall Street's median 12-month price target for Lennar Corp is $110.00, about 13.9% above its March 11 closing price of $96.57

• The stock recently traded at 13 times the next 12-month earnings vs. a P/E of 15 three months ago

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